Market Commentary 5/08/12

With the recent outcome of elections in Europe, voters have signaled their growing displeasure over austerity measures. This political upheaval has brought the return of volatility this month as concerns over the growth in Europe have resurfaced. The focus of these concerns is centered on the next potential crisis, Spain, whose 10 year government bond yields rose from 4.9% at the end of February to 5.75% this month. In addition to these problems, there are ever-growing concerns that suggest developing countries – especially China – will be unable to maintain the high levels of growth that most economists have been predicting would be the key bright spot in the global economy. As China has become an essential trading partner to developed and emerging markets, China’s export and consumption developments could have severe implications on the rest of the world. China’s ability to grow over the next several months will help determine the direction of the markets

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