Weekly Market Commentary 05/11/2018

At the start of the year, the three main fears in the financial markets were heightening trade tensions, rising inflation and an accelerated pace of monetary tightening. Of the three, the first seems to be worrying investors the most – and is lingering the longest. While the Trump administration did not announce any new tariffs this week, its abandonment of the Iran nuclear deal upset our trading partners and stoked further pressure on oil prices. The potential ancillary effects are considerably more ominous if it leads to ramped-up geopolitical tensions in the Mideast. Lurking on the calendar is a decision whether to pull out of Nafta, which would involve a broader swath of goods and have more disruptive implications for the economy.