U.S. markets posted positive returns supported by positive sentiment surrounding Republicans’ tax plan and upbeat economic data.  Strength in the U.S. dollar and interest rates weighed on both commodities as well as emerging markets.

The start of the week saw Republicans scrap their latest attempt at healthcare reform– again lacking the necessary votes– before pivoting quickly to unveil their tax reform plans.  The blueprint, which remains far from becoming actual legislation, calls for a number of changes, including collapsing the number f personal tax brackets from seven to three; doubling the standard deduction; eliminating the deduction for state and local taxes; allowing the “pass through” of business income at a 25% rate, instead of higher, personal tax rates; eliminating the estate tax; and cutting the maximum corporate tax rate from 35% to 20%. Small caps, which tend to pay a higher effective tax rate than large caps, rallied on the news ending the week up 2.8%.

On Tuesday, speaking before a business group, Fed Chair Janet Yellen reinforced the notion that the Fed will raise rates once more before year end. Remarking that she sees “considerable” odds against inflation settling at or above the Fed’s 2% target in coming years she warned “It would be imprudent to keep monetary policy on hold until inflation is back to 2%” and that the Fed should “be wary of moving to gradually”.