Summary

• Friday’s markets were surprisingly resilient given the escalation of the trade wars
• Big recovery in Euro periphery sovereign spreads on the back of Italian FinMin’s statement backing the euro currency
• Angela Merkel is having big problems within her government. Some speculate here days are numbered.  Watch this space
• Turmoil in EM financial markets continues. Turkey 10-year up 117 bps on the week, Brazil up 45 bps
• 2-10’s yield curve continues to flatten in the U.S.
• Junk spreads tighter on the week with CCC in big
• The relentless hammering of the Argentine peso continues. A move this large is not sustainable unless the country is monetizing.  Take a look at the chart below; the monetary base is growing 30 percent on an annual basis.  Argentina does not have the luxury of being a reserve currency.  In order to stabilize the peso, the central bank must tighten up base money growth.
• EM currencies weak across the board as monetary screws in the S. continue to tighten
• The dollar index hit significant resistance in low 95’s. An interesting chart is forming.  Is it a head and shoulders bottom forming or just a pause before the breakout?
• Euro stock markets outperformed last week, led by Italy
• Tech continues to outpace other sectors in the U.S. stock market
• Natural gas had a decent week
• Oil continues to correct in front of this week’s OPEC meeting