Risk assets sold off sharply during the 4th Quarter, leading the domestic stock market down for its worst annual performance since 2008. Investors spurned healthy US economic data, as unemployment remained below 4%, inflation (as measured by CPI) held above 2% and corporate earnings continued to post impressive double-digit growth. Non-US stocks were weighted down by US-China trade war rhetoric, uncertainty surrounding the pathway and effects of Brexit and the unsustainably high level of non-performing loans on the books of Italian banks. In addition, the unrelenting strength of the US dollar resulted in big declines for emerging market equity markets. Bonds proved more resilient but still the Barclays Global Aggregate Bond Index lost -1.2% in 2018. Towards the end of the year, credit spreads began to widen, signaling concern for lower liquidity and the overall quality of corporate bonds. As a result, high yield bonds fell -4.5% in Q4.