Political headlines overshadowed many other news-worthy events during this full week of trading after the U.S. holiday. The Senate announced it had the votes to pass the long awaited tax reform bill expected to provide large cuts to corporate rates. Markets took a defensive turn on Friday after Michael Flynn, President Trump’s former National Security Adviser, pleaded guilty to lying to federal agents and a report indicated he would testify that Trump directed him to make contact with Russians during his campaign. Economic growth for the third quarter was revised higher to an annualized real rate of 3.3% and North Korea fired another ICBM with longer range capabilities than previously thought.

The news coming out of the Senate helped domestic markets recover after the report about Michael Flynn became public and finished the week over 1.5% higher in the large company index. International markets and emerging countries appeared to be negatively effected in final trading hours by the sentiment coming out of the U.S. regarding Flynn’s new testimony. Emerging market stocks had a challenging week finishing four days out of five in the red and bringing trailing 1-month returns negative. The municipal bond yield curve has moved significantly higher this week as supply is set to be triple the yearly average in the next four weeks prior to the expected Republican tax plan becoming law.

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