The new year is in full swing, kicking off with plenty of headlines and events that set the stage for an eventful year ahead. The new administration took office, followed by a full slate of executive orders related to tariffs, regulations, government funding cuts, immigration and more. Strong employment data coupled with inflationary concerns around the new administration’s policy intentions pushed yields upward earlier in the month as investors anticipated rates remaining elevated for longer. Yields then declined to end the month as cooling inflation data inspired optimism for rate cuts later in the year. Fixed income posted modest gains in January and the Federal Reserve (Fed) left rates unchanged at their January meeting as expected.
On the stock side, US stocks climbed over the month despite a significant decline from Nvidia after news of a competing company in China entering the AI space. Despite the selloff, US stocks collectively gained over the month, with returns broadening out from big-tech companies as small cap and value stocks led the way. Expectations of future rate cuts, deregulation, and tax cuts combined with relatively strong earnings reports fueled optimism and contributed to the stock market’s positive performance over the month.
International stocks outpaced their US counterparts for the second month in a row, rallying on expansionary signs in the Eurozone, improving inflation, and the scaling-back of aggressive tariff policies from the new administration.
Looking forward, the conclusion of 4Q earnings season, inflation and labor market data, and ongoing updates on the new administration’s policies will be key headlines in the coming months.
| Index Performance | January | Trailing 12 Months |
| US Stocks (Russell 3000) | 3.16% | 26.32% |
| International Stocks (FTSE AW ex US) | 3.63% | 11.09% |
| US Bond Mkt. (BBgBarc Int. Gov/Cred) | 0.57% | 3.37% |
| Cash (ICE BofA ML 3-Mo T-Bill) | 0.38% | 5.20% |