Market Summary for week ended May 18

selling picked up in emerging markets this week signalling global liquidity is tightening up. EM 10-year yields higher across the board from Mexico up 20 bps to Turkey up 125 bps…( Indian yields stable for time being) Euro periphery spreads blow out. Italy 34 bps wider ( arrival of populist government), EM currencies hit hard: Argentina peso down another 5 percent, now down almost 20 percent in May; sends government back to the IMF( these guys sold 100 years dollar bond last year to oversubscribed to YEH DIL MANGE MORE global investors) Turkish lira down over 4 percent( they have one of the highest dollar debt in EM) Dollar index up 1.19 percent ( main culprit) France CAC up 1.31 percent ( is it capital flows out of Italy ?) S&P500 down about ½ percent (basically directionless) Russell 2000 ( US small caps)making new highs…..hmmm interesting Grains move higher ( extreme weather) Crude continues to march higher ( by now everybody is long crude) Gold back below $1300. ( forgotten asset but not for long)

Ritesh Jain