What’s Going On Here?
America’s announcement of new tariffs on Mexican products sent investors running from stock markets straight into government bonds (yields of which hit new lows).

What Does This Mean?
The US plans to charge an initial 5% tariff on all Mexican imports, rising each month until it reaches 25% unless Mexico agrees to curb illegal immigration. (The US believes that Mexico isn’t doing enough to stop people illegally crossing the US-Mexico border)

More tariffs will likely hamper economic growth further, and investors may worry that any deal the US eventually makes with China won’t hold (a US-China handshake is probably distant: China’s initial retaliatory tariffs against the US came into effect last Saturday).

Why Should I Care?
For markets: “Selling in May and going away” wasn’t a bad idea.

• US stocks had their second-worst May since the 1960s, and European shares didn’t fare much better;
• Higher demand pushed bond prices up and yields down.

Zooming out: Consumers spend their way out the mire.
It’d be a relief to retailers that spending may rise further as:

• Investors may have seen a silver lining in data showing growth in US consumer spending;
• American consumer confidence is at a six-month high (thanks to a strong jobs market).

Content source: Finimize. (2019) Another Day, Another Tariff. [Online] Available from: https://www.finimize.com/wp/news/another-day-another-tariff [Accessed 3 June 2019]