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And so, another tumultuous week comes to a close.

As is becoming customary in 2018, global markets were something of a rollercoaster. Italian assets were dumped indiscriminately on Monday and Tuesday, only to recover in dramatic fashion. Spain ousted Rajoy and appears headed for new elections sooner or later. Bill Gross blew up on a UST-Bund spread bet gone wrong. Donald Trump reignited the global trade war by reversing course on China and then took things up another notch by slapping tariffs on U.S. allies. And then, on Friday, the President of the United States (essentially) leaked the jobs report more than an hour ahead of time before welcoming a North Korean spy chief bearing a letter from Kim Jong-Un to the White House.

Oh, and see if you can spot the discrepancy here:

  • TRUMP SAYS KIM’S LETTER WAS A `VERY NICE LETTER’ (14:43)
  • TRUMP SAYS HE HASN’T OPENED KIM LETTER YET (14:52)

Again: just another week in the post-Western democracy reality.

Here’s the dollar on the week – you can clearly see the Trump tweet/jobs report bounce on Friday:

DXY

Here’s 10Y yields with the only three annotations you really need:

10Y

I don’t know what you want to make of U.S. equities this week. I mean, it was a holiday shortened affair and there was Italy on Tuesday as soon as traders got back (hungover) to the desks and then there was the Friday jobs rally:

US

European shares trimmed the worst weekly decline in two months, rising 1% on Friday for the best daily gain since early April as pessimism around the prospects for contentious new elections in Italy gave way to optimism around … I don’t know, something. Maybe that Italy now actually has a government, albeit one that harbors euro-skeptic tendencies.

Stoxx600.png

Italian equities briefly managed to get back to unchanged on the week before Friday’s gains were pared. Ultimately, this was the fourth consecutive weekly decline, but needless to say, it could have been a lot worse.

MIB

Roundtrip for BTPs – your guess is as good as anyone’s:

Italy10

It’s definitely worth keeping an eye on the banks over there. Friday’s bounce was notable:

BanksEU

For their part, Spanish equities fell for a third consecutive week, although like their European peers, they got some relief on Friday.

IBEX

Oil fell for a second week as bullish inventory data out of the U.S. and the threat of escalating geopolitical tensions hasn’t been enough to trump record production in America and, of course, speculation that OPEC and Russia will ultimately move to stem the rally.

WTI

Notably, the WTI-Brent spread is the lowest since early 2015:

WTOBrent

Tough week for the real, as the resignation of Pedro Parente from Petrobras rattled markets already on edge from the trucker strike and amid broader jitters about EM. Generally speaking, this just continues to get progressively worse although smart people can argue about the extent to which it’s justified:

USDBRL

The Turkish lira was hilarious this week, rising on renewed confidence in CBT after the central bank simplified monetary policy and then falling on Friday amid downgrade speculation. Still, this was a good week for the beleaguered currency.

USDTRY

Ok, I think that’s enough for Friday evening.

For your moment of zen.: “boy would you like to know what was in that letter”…

 

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