Looking Back at May
As expected, market volatility continued throughout the month of May.
There were positives during the month.
- Oil prices have receded from their highs
- The 10-year treasury bill has temporally dropped below 3%
- A new law was signed into effect which should give the smaller banks a less stringent regulatory environment. (This should help smaller banks compete with larger ones.)
Negatives for the market were generally geopolitical in nature.
In March, President Trump announced plans for steel and aluminum tariffs, but granted some exemptions while countries negotiated. Beginning June 1, 2018, all tariffs are back in play. The reasons cited were lack of progress on new negotiated deals. We feel the U.S. will prevail with better trade policies.
Another smaller down side that took place the last few days of the month is the financial stability of Italy. Government borrowing costs are skyrocketing. Investors are worried that Italy may drop out of the Eurozone and its common currency. If Italy were to pull out, the effects would ripple throughout Europe with Spain being the next to drop out of the euro.