Sector performance was mostly positive, with Energy soaring 14.2%, almost twice as much as the next-best, Materials. Financials posted the worst month, down 2.4%, as Technology and Healthcare finished virtually flat.
The Federal Reserve paused rate cuts after three consecutive 25-basis-point rate cuts to end 2025. Nonfarm payrolls missed expectations by 23,000 jobs in December, though the unemployment rate has continued to trend lower for the second month in a row. Housing prices continue to fall, and existing home sales activity spiked up 5.1% MoM. Looking ahead to the next FOMC meeting, markets expect just an 11% chance of resumed rate cuts as Chairman Jerome Powell closes out his term at the Fed.
Treasury yield movements were small in January, though almost the entire curve ticked higher. The 1-month was the lone decliner, down just 2 basis points to 3.72%. The 3-month and 1-year rates went unchanged, while all others increased between 2 to 8 basis points.
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