Global equity markets sensed panic in the air overnight and tumbled. Fears of an international debt crises were triggered by the growing turmoil in Italy. The failure of the populist parties, Five Star/League to form a Government and the appointment of an unelected bureaucrat to form a new Government has caused turmoil within Italy, the EU and global markets. The fears of a global credit crises spread to US Banks, which lead equity markets lower, driving safe haven flows to the Dollar and Yen. The EUR collapsed to 1.1530, while the Yen hit 108.50 and significantly stronger on the cross-rates. US 10 treasuries fell to 2.85%, while Italian Bond Yields spiked, reflecting contagious fears on the rise. The Spanish Government is also under pressure, raising the threat levels to the EU, even higher.
US-China Trade talks suffered a setback, with the US signalling $50 Billion in tariffs on Chinese products, while further meetings are scheduled with NOKO officials. This did nothing to assist already nervous markets. US markets opened lower, after the Memorial Day long weekend, despite positive economic data. The S&P Case Shiller Home Price Index gained 6.5%, while Consumer Confidence jumped, but this was largely overwhelmed by Geo-Political events. The rising Dollar pushed commodity currencies lower, with the AUD testing 0.7500, while the NZD slipped below 0.6900 again.Posted on