Stock Markets Near Record Highs Amid Trade Concessions and Tariff Flexibility

U.S. equities continued their upward trajectory, with the S&P 500 and Nasdaq 100 hovering NEAR all-time highs despite a downward revision to first-quarter GDP. The economy contracted by 0.5%, worse than the initially estimated 0.2% decline, as consumer spending growth slowed sharply to 0.5% from 1.2% amid escalating trade tensions.

Trade policy developments provided tailwinds for risk assets. The WHITE House signaled flexibility on tariff deadlines for cooperative trading partners, with advisor Stephen Miran suggesting the July 9 deadline could be extended for nations negotiating in good faith. Baseline tariffs may stabilize at 10% or see modest reductions for compliant countries.

European trade negotiators appear to be opting for conciliation over confrontation. Rather than implementing retaliatory measures, EU officials are reportedly considering tariff reductions on select U.S. imports while scaling back non-tariff barriers. This pragmatic approach suggests both economic blocs are seeking to avoid an escalatory spiral as the deadline looms.