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Trade Volatility Continues to Lead Markets

Financial markets once again took direction from the volatile US-China trade negotiations as the likelihood increased that the current trade disagreements will result in a full-blown trade war.  US equity markets closed the week lower by 1%, while bond yields rose as Treasury prices were lifted by safe haven flows.  Weak economic data also contributed to the move lower in yields.  Thursday's purchase manager indices showed weak sentiment across the economy, although the readings were still slightly above the break-even mark of 50.  The reading of 50.6 on the manufacturing gauge was the lowest in nearly ten years and reflected the uncertainty manufacturers face amid the escalating trade conflict with China.  On Friday, the release of April's durable goods orders showed a sizable decline in addition to negative revisions to prior results.  Although some weakness was expected owing to Boeing's current difficulties, the weakness in capital goods orders spread beyond the transportation sector.

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