🛬 Relief Rally or Just a Layover?

Weekly Brief / May 12 - May 16, 2025

May 21, 2025

Hey Decoder — markets took a victory lap last week after a cocktail of good news: inflation cooled, trade tensions thawed (for now), and President Trump did his best Davos impression in the Middle East. But don’t break out the bubbly just yet. This might be a stopover, not the destination. Let’s decode the rebound.

 ðŸ“Š MARKET SNAPSHOT

  • S&P 500: +5.3% to 5,958.38 — best week in months on trade and inflation relief

  • Nasdaq: +7.2% to 19,211.10 — tech surged on Middle East deal optimism

  • Dow Jones: +3.4% to 42,654.74 — industrials joined the party

  • Gold: $3,202/oz — volatile but still in demand

  • Brent Crude: $65.41 — bounce on easing trade friction

  • 10-Year Treasury Yield: 4.43% — stable, signaling belief in a Fed pause

WHY THE MARKET JUST RALLIED LIKE IT FORGOT APRIL HAPPENED

Donald Trump GIF by PBS NewsHour

What Happened:
Markets surged after a 90-day truce on U.S.–China tariffs, soft U.S. inflation (CPI at 2.3%), and high-profile investment deals struck during Trump’s Middle East tour.

Why It Matters:
Investors were bracing for more policy fireworks. Instead, they got a ceasefire and softer inflation — two of the biggest fear factors neutralized, at least temporarily.

What It Means For You:
This isn’t a pivot to bullish paradise, but a tactical sigh of relief. Growth-sensitive and rate-sensitive sectors (think tech and small caps) are leading for now, but geopolitical risks are just hitting snooze, not gone.

📈 CHART OF THE WEEK

S&P 500 posts biggest weekly gain of 2025, driven by trade optimism and tame inflation data.

🧩 QUICK DECODER: WHAT’S A ‘TARIFF TRUCE‘ ANYWAY?

It’s a pause, not a pact. The 90-day U.S.–China truce means reduced import duties (from 145% down to 30%) but no structural resolution. Translation: the timer is ticking.

✅ ACTIONABLE TAKEAWAY  

Lean into sectors with global exposure and pricing power while watching for signs this truce might unravel. Ideas:

  • Tech (e.g., NVDA, MSFT) for demand tailwinds

  • Industrials (e.g., CAT, GE) on trade thaw

  • Keep dry powder in defensives in case this bounce fades

🧭 THIS WEEK’S INVESTOR TO-DO LIST

  • May 21 (Wed): U.S. Existing Home Sales — housing pulse check

  • May 22 (Thu): Eurozone PMI Flash — early look at manufacturing momentum

  • May 22 (Thu): U.S. Initial Jobless Claims — labor market resilience gauge

  • May 23 (Fri): U.S. Durable Goods Orders — business capex signals

  • May 24 (Sat): G7 Finance Ministers Meeting — global policy vibe-check

📬 Final Thought
The market loves a break from chaos, but don’t confuse a pause with peace. Stay curious, stay balanced, and don’t let the rally pull you off-plan.

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