December closed out the year in a negative fashion for both equities and bonds, to leave the two main asset classes firmly in the red for the calendar year. Economic activity releases in December showed that the global economy remains under pressure. Overall, global trade and purchasing manager indexes have been fragile as major central banks continued to tighten monetary policy. However, pricing pressures should ease as global supply chain issues recede and energy prices retreat year over year.
The Federal Reserve, ECB, and the Bank of England all raised interest rates at their respective December meetings. However, given the varying pace of hikes seen to date, we expect to see central bank policy diverge somewhat in 2023. Japan’s bond market remains under pressure following the Bank of Japan’s sudden change in its yield curve management strategy.
In Asia, China has reversed many of its ‘zero-COVID’ policies with mobility restrictions reduced, case numbers no longer being released, and travel mostly reopening.
For full details of last month's market movements you can download our monthly reports below.
The first years of this decade have heralded a particularly disruptive period in human history. The return to a “new normal” following the COVID-19 pandemic was quickly disrupted by the outbreak of war in Europe, ushering in a fresh series of crises in food and energy – problems that decades of progress had sought to solve.
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