Market Action

• Stocks welcomed the first interest rate increase in nearly a decade with a strong rally on Wednesday but gave up gains the following two days and closed down on the week. Energy and materials continued their dismal performance this year.
• Argentina lifted capital controls on the peso Thursday, prompting a 30% decline in the currency in a day. The move is part of Mauricio Macri’s, the new President, agenda of reversing years of anti-market policies installed by previous administrations.
• The Bank of Japan announced plans to increase purchases of ETFs using the central bank’s balance sheet and extend the duration of its JGB portfolio. Markets quickly soured on the announcement due to its small size.
• U.S. lawmakers agreed to a tax and spending package that funds the government for the next year. As part of the deal the U.S. will lift the 40-year ban on exporting crude oil. Removing the ban has been controversial but the explosion of energy resources from shale fields and low prices has made the case for removing the ban more compelling.
• Bond funds saw more volatility this week ahead of the Federal Reserve’s rate hike. High yield funds were cited as having poor liquidity while investment grade funds saw their largest withdrawals last week in over 20 years.
• 21 out of 22 emerging markets tracked by JP Morgan have had their 2016 GDP forecasts downgraded in the past three months. Several reasons exist for the pessimistic outlook for the group: low developed-world demands, the busts of commodities, and political hurdles have all been cited.
• The White House and House of Representatives both issued statements and intentions to find ways to help Puerto Rico with its debt crisis. The goal is to devise a resolution before March.

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