Monday melt up in stocks, with major indices gapping to record highs as traders look to a trade deal with China, a Fed rate cut, and an accelerating earnings season.

Over the weekend, Treasury Secretary Bessent teed up a Thursday meeting between Presidents Trump and Xi, saying a ‘positive framework’ for trade between the two countries had been agreed to.

Given Trump’s volatile negotiating style, we’ll believe it when we see it.

Nevertheless, with a near-certain rate cut on Wednesday and an accelerating earnings season, news flow is overwhelmingly positive.

As of Friday, with 29% of the S&P 500 in the books, blended Q3 earnings growth is running at 9.2% (y/y), up from 7.8% a week earlier.

Five of the Mag 7, representing $15 trillion in market cap, report this week. GOOG, META, and MSFT on Wednesday, and AAPL and AMZN on Thursday. As a group, Mag 7 is expected to print 12% y/y earnings growth on revenue growth of around 15%.

All this friendly sentiment has led to a rebound in risk-sensitive FX, putting a modest offer in the dollar. We like the greenback here, and the pattern of higher highs/higher lows since bottoming last month. As long as that holds, we’ll fade weakness.

Treasury yields are higher as the government’s plan to auction $183 billion in coupons today and tomorrow competes with a potential surge in corporate issuance. My credit colleagues say that a dozen deals could hit today as bankers take advantage of risk-on markets and investors look to lock in rates before the FOMC meeting.

More later.