Volatility that gripped markets throughout 2018 declined significantly in the first full week of the year. Progression on U.S. China trade talks regarding purchases of domestic farm and energy commodities and greater access to China’s markets added to optimism. More out of Washington, the government shutdown still looms and is now the longest in history at 22 days (including January 12); President Trump also held a national address pointing to a “humanitarian and security crisis” on the United States southern border. He continues to demand funding from Congress to build a wall which will be “indirectly paid for” by a trade deal with Mexico.

U.S. stocks ended its third week in a row with gains; although they experienced an ever-so-slight decline in Friday’s activity. Small company stocks outpaced their large counterparts and international equities, both developed and emerging, followed suit. In the face of a moderate yield curve inversion, Fed Chair Powell noted in a speech to the Economic Club of Washington that the FOMC would be patient about interest rate hikes going forward. Markets have been accepting of the dovish tone from Fed officials as of late. Crude ended a 9-day positive tear on Friday with a 1.9% decline; however, the broader commodity index is seeing advances in 2019.

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