Weekly Market Commentary 06/08/2018

Following last week’s turbulence sparked by heightened trade tensions and the uncertainty surrounding the Italian elections, the financial markets enjoyed a period of relative calm this week, devoid of dramatic geopolitical news. In the spirit of “no news is good news”, stock prices staged a meaningful rally and bond yields are poised to resume their upward climb. To be sure, the saber-rattling between the U.S and its key trading partners, most notably Europe, our Nafta allies and China, regarding the imposition of tariffs on aluminum, steel and an array of other imports, continue to capture headlines and sustain worries that a global trade war could yet break out. While this unsettling prospect is tolerated by the markets for now, it is not going unnoticed in corporate boardrooms. In the latest Business Roundtable survey, corporate CEOs felt slightly less optimistic about the economic outlook in the second quarter than in the first, with the main concern being government trade policy. That said, the dip in the outlook index was barely perceptible and came off of a record high in the first quarter.