The Range of Possible Economic Outcomes is Wide. Diversification is Key

Despite tariff concerns and an AI scare driving the bid for safe haven assets towards the end of the month, strong earnings and consumer spending drove another positive month of equity returns in January. The S&P 500 Index closed the month at another all-time high despite volatility. International developed equities (+4.4%) were among the best performers, followed by US mid-caps (+3.7%) and US small-caps (+2.9%). Bonds were mostly up as high yield credits increased 1.4%, Treasury inflation protected notes gained 1.3%, and the US Aggregate Bond Index rose 0.6%. Commodities were among the best performers, with silver and gold at 8.28% and 6.79% respectively, with broad-based commodities (+3.85%) and crude oil (+3.27%) also producing notable returns.