Markets posted mixed returns during a week that saw some limited volatility. Further flattening of the yield curve and significant high yield outflows raised concerns that the bond market might be signaling an impending selloff in equity markets.  As measured by the spread between the 2– and 10-Year Treasuries, the yield curve flattened to a level last not seen in over a decade. At the same time, according industry group Lipper, High Yield mutual funds and ETFs posted -$4.4B in net withdrawals for the week ended Nov. 15, the fourth largest weekly outflow on record dating back to 1992.

Congressional efforts at tax reform advanced as the House passed its tax legislation and the Senate Finance Committee approved that chamber’s legislation, sending it to the full Senate for debate. Passage of the bill remains uncertain as one Republican Senator has already voiced opposition and several others appear to have significant reservations. Even if approved in its current form, the House and Senate bills would need to reconcile a number of important differences including the repeal of the individual mandate under the Affordable Care Act, whether or not the individual tax cuts would be temporary or permanent, and the timing of corporate tax cuts.

Over the weekend, German Chancellor Angela Merkel was dealt a blow as efforts to form a coalition government collapsed creating one of Germany’s political crises since the end of WWII. Faced with leading with minority government or holding new elections, Merkel seems to be leaning towards the latter option.  And while she has insisted that she will not step down, Germany’s political landscape, long seen as one of the most stable in Europe, suddenly appears to be rather precarious.