An agreement on Wednesday reviving a trade truce between the US and China stoked investors’ optimism over the economic outlook, as hopes grow that tariff relief and a tax deal in Congress will buoy sentiment among American consumers and businesses. Tariffs on US and Chinese goods will return to lower levels that both sides agreed to during talks in Switzerland last month. The latest round of talks in London presented the latest wrinkle in the Trump administration’s efforts to remake the trade landscape, which has left market participants guessing over the likely direction of the global economy. President Donald Trump said Wednesday he is open to extending a July 8 deadline to complete trade deals, but he added that his administration plans to send letters to trade partners within the next two weeks to outline final terms.

Despite a thaw in global trade tensions, forecasts have struck a cautious note about the economy’s prospects this year. The World Bank is the latest organization to dim its US forecast with a new estimate of 1.4% growth this year, after the economy expanded 2.8% in 2024. That would be a sharper deceleration than the 2.3% growth that the World Bank predicted in January. The Federal Reserve, which is set to make its next rate decision and release updated economic projections next week, faces a potentially tricky scenario if economic activity deteriorates—causing unemployment to rise—while inflation remains above its target. Consumer inflation in May was tamer than anticipated month-to-month at 0.1%, potentially allaying concerns over the impact of tariffs. The price index gained 2.4% year-over-year, up from 2.3%, but core inflation was steady at 2.8%The price index gained 2.4% year-over-year, up from 2.3%, but core inflation was steady at 2.8%, according to the US Labor Department on June 11. Jennison’s Mark Baribeau, Head of Global Equity, shares his perspective on growth equity investing in the current dynamic environment.