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Ivan Gruhl, Chief Investment Officer, HK Financial Services

Overview: Stock markets declined and bonds rallied last week as global trade tensions persisted amid continued economic growth concerns. Last week the Trump administration announced plans to impose tariffs on imports from Mexico in an effort to control migrants crossing into the U.S. If implemented, the tariffs would start at 5% on June 10 and would escalate periodically in increments of 5% to a maximum of 25% in October. Markets reacted negatively to this new trade twist, with the S&P 500 index down 2.6% for the week. All major global stock indexes posted negative returns in May for the first down month of the year in 2019. Volatility is likely to remain elevated until evidence of progress in trade policies is seen. Meanwhile, interest rates have dropped significantly on the flight-to-safety trade with the 10-year Treasury improving to 2.14% in yield, down from 2.50% at the beginning of May. Markets are now pricing in at least one rate cut for the remainder of 2019: The Fed has indicated its vigilance to economic changes but has not indicated a need to change rates at this point.

This communication is for informational purposes only. It is not intended as investment advice or an offer or solicitation for the purchase or sale of any financial instrument.

Indices are unmanaged, represent past performance, do not incur fees or expenses, and cannot be invested into directly. Past performance is no guarantee of future results. 8611501