The U.S Futures Market Rises as Trade Progress Lifts Sentiment

U.S. equity futures moved higher on Monday, bolstered by signs of momentum in trade negotiations between the Trump administration and key international partners. This optimism added to the positive sentiment that recently pushed the S&P 500 index to a new all-time high.

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Futures tied to the S&P 500 rose by 0.4%, while Nasdaq 100 futures gained 0.5%. Meanwhile, stock markets in Europe and Asia showed minimal change, with both regions trading mostly flat. The U.S. dollar extended its recent downturn, sliding 0.2% against a basket of major currencies and hovering near levels not seen in nearly three years.

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At the same time, demand for U.S. government bonds increased, sending the yield on the 10-year Treasury note down by three basis points to 4.25%.

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Last week, U.S. equities reached record territory amid easing geopolitical tensions and continued signs of strength in the domestic economy. This rally came despite President Donald Trump’s ongoing efforts to reshape global trade policy through the use of tariffs.

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Additionally, subdued inflation data has led investors to increasingly anticipate that the Federal Reserve could lower interest rates later this year, even as central bank officials maintain a cautious, data-dependent stance.

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With Trump’s July 9 deadline for major trade discussions looming, negotiations with key partners such as China and the European Union appear to be gaining traction. Market participants are also closely watching upcoming economic indicators, particularly the monthly employment report scheduled for release on Thursday. This data will be crucial in assessing the overall health of the economy and determining the likelihood of any policy shifts by the Fed in the months ahead.

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“The near-term market environment has been shaped by a convergence of several supportive factors,” explained Daniel Murray, CEO of EFG Asset Management in Switzerland. “At the heart of this sentiment boost is a wave of encouraging developments around trade deals involving the U.S.”

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In addition to trade talks, negotiations continue in Washington over President Trump’s proposed tax-cut package. Republican lawmakers are working to solidify support and secure the votes needed for final passage.

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However, the bill faces criticism due to its projected impact on the federal budget. According to a recent analysis by the nonpartisan Congressional Budget Office (CBO), the legislation would increase the U.S. deficit by nearly $3.3 trillion over the next ten years. This fiscal outlook has added pressure on the dollar, which has been weakening throughout 2025.

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The U.S. Dollar Index, a widely watched measure of the greenback’s performance against major currencies, has fallen nearly 9% so far this year. That marks the worst first-half performance since the index was established in 2005.

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“The dollar is still under cyclical downward pressure,” wrote Lloyd Chan, a strategist at Mitsubishi UFJ Financial Group, in a note to clients. “This trend is being driven by lingering concerns over U.S. fiscal policy and the lack of clarity surrounding international trade initiatives.

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A significant contributor to the dollar’s vulnerability could be a rapid increase in government borrowing, particularly as a result of President Trump’s ambitious tax legislation.”

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In Asian markets, currency volatility also made headlines. The Taiwan dollar experienced a sharp drop of more than 2% against the U.S. dollar, weakening to 28.895. This unexpected movement occurred late in the trading day and followed a similar pattern from the previous Friday. The abruptness of the decline has prompted speculation that Taiwan’s central bank may have intervened to prevent further appreciation of the currency.

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Overall, global investors remain focused on the evolving landscape of trade, monetary policy, and fiscal developments in the U.S., which together are shaping market expectations across asset classes. While optimism has returned to equities, especially in the U.S., the uncertain future path of the dollar and interest rates continues to influence investment decisions.

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Market watchers will be closely monitoring both the progress in U.S. trade talks and any concrete policy signals from the Federal Reserve. In the meantime, the next few days of economic data releases, including the crucial payrolls report, are expected to provide additional clarity on the strength of the economic recovery and whether current expectations for rate cuts will hold.

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In summary, investor sentiment remains upbeat for now, thanks to improving trade relations and a resilient economy. But with fiscal risks on the horizon and the dollar weakening, the road ahead may be more volatile as markets adjust to the evolving global and domestic policy environment.

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