QCP Asia Colour – 14 May 2025 Markets rally on US–Saudi trade breakthrough Markets staged a sharp rebound overnight, buoyed by an unexpectedly bullish turn in US trade diplomacy. Washington signed a landmark $600 billion trade pact with Saudi Arabia, prompting a rollback in tariffs and sparking a fresh wave of risk-on sentiment. With this, the “Art of the Deal” era appears alive and well. Equities climbed another leg higher. The S&P 500 has erased last month’s 17% drawdown and is now flat on the year, defying bearish expectations and underscoring the market's renewed appetite for risk. US CPI softens, but Fed holds steady US CPI came in below expectations, providing a welcome reprieve to inflation worries and bolstering bets on rate cuts. Still, the Fed remains cautious. At its last meeting, officials reiterated a data-dependent stance, flagging the uncertain downstream effects of tariffs on both unemployment and inflation. The first cut is currently priced in for July, but in our view, September is more…