As was expected, the Federal Reserve Open Market Committee raised the Fed Funds rate target by 25 basis points to a range of 1.25% – 1.50% at the conclusion of the group’s two-day policy meeting this week. A compromise tax bill has been hashed out in the House and Senate and will be voted upon next week in both legislative bodies before going to the President to sign and ultimately take effect; broadly speaking, tax cuts are expected for both the consumer and corporations with top tax brackets being 37% and 21% respectively. Global economic activity continues to expand, measured by manufacturing PMIs, in Europe reaching an all time high as well as Japan reaching a four year high.

Domestic stock indices responded favorably to news about the compromise tax bill and continued their trend higher. The S&P 500 has gone over 60 sessions without rising or falling 1%, which has been the longest run in over 20 years. International developed and emerging market stocks also moved higher this week, but the commanding lead each held over domestic markets YTD has began to thin. The aggregate bond index generated positive returns this week as long dated yields declined and flattened the overall curve. High yield corporate bonds did not follow other asset classes and declined during the week but still outpace the aggregate index YTD.

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