U.S. equity markets skipped their typical fourth quarter rally and Santa was a no-show in December. Just a month after becoming the longest U.S. bull market, the S&P 500 Index corrected sharply, dropping -19.8 percent between September 20 and December 24 – just 21 basis points shy of the “official” definition of a bear market. A volatile and terrible December for the global equity markets sparked a flight to quality that drove treasury yields lower with non-government bonds lagging considerably for the month. Recent financial market unease notwithstanding, leading economic indicators generally remain favorable and do not imply recession is imminent within the next 18-24 months. However, real GDP growth will likely decelerate towards +2.0 percent in 2019 from a projected +3.0 percent in 2018 as the direct impacts of fiscal stimulus diminish, financial conditions tighten, and partisan conflicts intensify. We are optimistic a U.S.-China trade deal will begin to take shape in coming months, albeit progress will be subject to fits and starts, and that the Federal Reserve will be data dependent as it normalizes interest rates and its balance sheet concurrently. Overall, we expect the treasury curve to drift another half to a full percentage point higher over the course of the year.