Here is what happened in the Capital Markets this week.
The Weekly Bottom Line (please click link to open)
The Weekly Bottom Line, courtesy of TD Economics, includes a review of market performances, recent key economic indicators, a calendar of upcoming key economic releases, and other relevant data. The highlights from this week’s report include:
- Fears of fresh elections in Italy spooked investors, who unloaded Italian bonds – sending yields on short-term government debt skyrocketing. By the end of the week, Italy’s populist coalition was finally allowed to form a government. But far from closure, this likely marks the beginning of a new chapter that will test the Eurozone’s stability.
- The U.S. turned up the heat on trade tensions by announcing that it would go ahead with tariffs on $50B of Chinese goods, and that it would end the exemption on steel and aluminum tariffs for Canada, Mexico and the EU.
- By the end of the week, markets shrugged off the latest developments in Europe and on trade, supported by a string of positive U.S. data – in particular, a very healthy May payrolls gain of 223k and wage growth that accelerated to 2.7% y/y. The latest data cement the case for a Fed rate hike at its June meeting.