A war of words have gripped news headlines and been at the center of market movements this week as the North Korean leader, Kim Jong-un, and United States President, Donald Trump, exchange remarks across the media. A mix of views from key domestic administration members and geo-political experts are now constantly being analyzed by market participants as to what the most likely, most beneficial and most detrimental outcomes of the hostility may be. The threat of an unfriendly, nuclear sovereign body so close to several major U.S. allies is one thing nearly impossible to ignore.
Markets began the week with news of new sanctions passed by the United Nations on the foreign body in question with little positive or negative movement, but as soon as the tension began to pick up, global equities took a collective negative turn. The U.S. markets fell over 1% this week while developed international stocks lost twice as much. Haven assets began to favor after the move with the yen and gold rising along with Treasuries and other core fixed income assets. High yield, similar to equities, suffered a major decline; and short term expected volatility in major markets has increased sharply with the news.
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