20th May 2017

We were traveling for the latter part of the week and consequently missed out on quite a bit of volatility in a number of markets. In this regard, both the dollar and US equities gave up substantial ground, while gold had its biggest weekly advance since early April. Much of the turmoil was caused by political developments in Washington, all well known to all our readers by now and ones that will not be rehashed again here. Suffice to say that with each passing day, markets are becoming increasingly concerned about the growing turmoil engulfing the Trump administration. Although this unease has been behind the steep decline in the US dollar for some time, the US equity markets have largely ignored this growing dysfunction. However, equity investors finally took notice on Wednesday, with the Dow tumbling by almost 2% on the day -- its biggest drop since the election. The selling reversed course during Thursday’s and Friday’s session, as a stream of constructive earnings reports brought the buyers back in, but the various indices still finished down on the week. Moreover, the spike in volatility will undoubtedly leave investors nervous heading into the new week.