- As expected the Fed raised rates by 25bps; any further tightening to be gradual
- Treasury yield curve flattened and investment grade credit spreads widened
- Oil hit an 11 year low and the high yield sector remained under pressure
- Downside global growth risks; we expect fewer rate hikes than the Fed forecast
December witnessed a further rocky month, in what was a volatile year across markets, as concerns over global growth deepened. The Fed finally delivered a 25bps rate increase; markets were relatively unchanged and the news well absorbed by emerging markets. Geopolitics and the steep fall in commodities however weighed on market sentiment; Brent crude fell 16.4% to 11-year lows after OPEC agreed to keep taps running. Currencies also came under pressure in December, this was also a theme through the year as the dollar appreciated 9.3% (DXY Index). The yield on the ten-year US Treasury rose six bps to 2.27%.