For the week, the equity markets were down more than 1 percent as investors followed political events in Washington D.C. While the markets have been mostly focused on the global surge in earnings growth this year, political drama took center stage this week as there are concerns that the current administration will be unable to successfully enact tax reform and deregulation.

Fed Taper Brings Risk to Mortgage Bonds Unseen in Treasuries

For all the talk that Janet Yellen’s plan to shrink the Federal Reserve’s balance sheet will hurt Treasuries, U.S. mortgage bonds face a bigger test.
   

Headlines screaming, “fire and fury,” and “ballistic rockets are on constant standby,” could have surely warranted a multi-percentage sell-off. Fortunately, the market’s reaction was somewhat muted, falling just over 1 percent for the week. Historically, North Korean headlines have had minimal impact on the stock market. In 2006, when they detonated their first nuclear device, U.S. stocks were actually up.