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Wall Street strategists have a word of warning for investors hoping to recuperate this summer after a tumultuous stretch of market trading: Don’t rest on your laurels.

While the sunny season in Western Europe and the U.S. is typically characterized by lower trading volumes, a multitude of political risks from Brexit to trade frictions aren’t showing signs of letting up.

“We’re heading into a summer that is going to remain volatile,” Andrew Sheets, Morgan Stanley’s London-based head of cross-asset strategy, said in an interview with Bloomberg TV’s Francine Lacqua.

“We have upcoming headlines on steel tariffs, we have upcoming headlines on China trade negotiations, we have Nafta, we have an uncertain political backdrop in Italy, we have a new government potentially in Spain. There’s a lot for the market to digest.”

Sheets recommends “taking positioning down” and paring risk exposures to a “more neutral” stance.

Even as jitters over Italy’s new populist government abate, its ability to lead is already being questioned by the likes of George Soros, who warned over the weekend that differing agendas could spark renewed crisis and may ultimately doom the coalition.

Trade tensions among the wealthiest nations have reached a boiling point as world leaders prepare to decamp to Charlevoix, Quebec for a Group of Seven summit Friday. Days of talks between the group’s ministers ended in acrimony Saturday as U.S. allies roundly condemned proposed tariffs on steel and aluminum imports from the European Union, Canada and Mexico, and threatening retaliatory measures unless the White House recants.

Italy and trade rifts are a taste of risks to come, JPMorgan Chase & Co. said.

“A fresh round of acute global political and policy uncertainty that marked the first week of summer foreshadows a likely coming several months of global event risks and potential global shocks,” according to strategists led by Paul Meggyesi in a note to clients. June looks “particularly treacherous.”

Meanwhile, the stars may be aligning to extend the dollar’s lucky break -- tightening financial conditions for overseas borrowers, and increasing the prospect of volatility for embattled emerging markets.

“The dollar’s outlook over the summer remains bullish,” Mansoor Mohi-uddin, head of FX strategy at Natwest Markets Plc, wrote in a note. He cites Federal Reserve rate hikes, trade protectionism, and the European Central Bank’s challenge to normalize policy amid political risks in the euro area.

Perfect storm

A fraught summer of Brexit negotiations threatens to overtake Bank of England policy as the biggest driver of the pound, according to strategists at ING Groep NV. A summit with European Union officials kicks off at the end of the month, ahead of Britain’s scheduled exit in March 2019 with the U.K. still struggling to forge a proposal on post-Brexit customs arrangements.

For credit investors, it’s time to get defensive to “weather what is likely to be a relatively volatile summer,” according to Wells Fargo & Co. strategists led by George Bory. They cite “heightened” concerns about trade wars, and the prospect of tighter monetary policy overshadowing an otherwise healthy economic backdrop.

There could be one silver lining: U.S. high-grade supply may continue to be unusually muted over the coming months thanks in large part to tax reform, according to Peter Tchir, the New York-based head of macro strategy at Academy Securities Inc.

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