Fourth Quarter 2018 Market Review

US Stock Market: -14.3%
International Developed Stocks: -12.8%
Emerging Markets Stocks: -7.5%
Global Real Estate: -5.8%
US Bond Market: +1.6%
Global Bond Market ex US: +1.9%

4Q 2018 Stock Market Review

Global markets experienced a major correction in the fourth quarter of 2018, primarily driven by political turmoil. The U.S. Government has been shut down for a record amount of time amidst the border wall dispute. U.S. and China trade relations continue to decay while most economic metrics remain pat. If the government does not open in the coming weeks, we will likely see lower GDP for 1Q 2019; as of now, the effects of the government shutdown appear to be benign.

4Q 2018 Fixed Income Review

Bond funds increased in value as investors sought safer investments amidst a volatile stock market.

The Federal Reserve raised interest rates for the ninth time since 2015, bumping rates to a range between 2.25% and 2.50%. As with many announcements, future guidance is just as important as the news; subsequently, rates decreased as The Fed decreased their projected number of rate hikes in 2019 to two from three. Economy nerds, like myself, can find the minutes from all Federal Reserve meetings at the following link:

https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

Ten-year government bond yields peaked at 3.23% during the quarter, once in October and again in November. As the stock market dropped, investors sought safer investments as excess demand for bonds pushed down ten-year government bond yields to 2.69% to end 2018. Ten-year government bond yields bottomed at 2.55% on January, 3rd 2019 but have rebounded nicely as they currently sit at 2.76% as of January 25th, 2019.