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Volatility returned last week due to trade tensions and a sudden geopolitical shock, even though economic data showed moderating growth and lower inflation. In this commentary, we break down the key developments, from Washington to the Middle East, and discuss what they mean for markets, interest rates, and long-term investors.

Markets Rebound Sharply, but Policy Uncertainty Remains

Impact of Trump’s Big Beautiful Bill on the Bond Market and Dollar

Global equity markets have staged an impressive rebound since bottoming on April 8. At that time, the Nasdaq 100 had fallen into a bear market, declining more than 20% from its high in mid-February. By mid-May, the Nasdaq 100 had erased its year-to-date decline and even turned positive. The S&P 500 likewise rallied from the April lows, led by easing fears of a worst-case trade war outcome. In fact, U.S. stocks rallied over 3% on some days when news broke that the U.S. and China were dialing back their tariff war.

Equity markets were relatively unchanged this past week, with the S&P 500 finishing flat after giving back early gains spurred by news that the U.S. would temporarily exempt certain tech products from new China tariffs.