Decades-High Inflation and Historic Fed Rate Hikes Weigh on Stocks and Bonds 2022 proved to be a historically difficult year for risk management as surging inflation led to swift increases in interest rates. While geopolitics certainly played a role, interest rates were the key driver of market performance this year. Easing inflation pressures and a resolution of the fiscal turmoil in the United Kingdom fueled a strong rally in stocks and bonds early in the fourth quarter, but hawkish Fed guidance, disappointing economic data, [...]

Stocks and Bonds Extend Their Declines in the Third Quarter Global markets declined again in the third quarter as inflation remained near multi-decade highs, geopolitical tensions escalated further, and the Federal Reserve continued to aggressively hike interest rates. The third quarter started with a solid rebound in stocks and bonds that was driven by resilient corporate earnings, signs of a possible peak in inflation, and hints from the Federal Reserve that the end of the rate hiking cycle may come sooner than markets initially [...]

Inflation, Higher Rates, and Recession Risks Push Stocks and Bonds Lower in the Second Quarter The S&P 500 continued to decline in the second quarter, hitting the lowest level since December 2020 as still-high inflation, sharp increases in interest rates, rising recession risks, and ongoing geopolitical unrest pressured stocks and other assets. After a rebound in March, the S&P 500 dropped sharply in April to start the second quarter. While some of the reasons for the declines were similar to the first quarter (rising [...]

Volatility Returns to the Markets In 2022 After a historically calm 2021, volatility returned in the first quarter of 2022, as inflation surged to 40-year highs, the Federal Reserve promised to raise interest rates faster than previously thought, and Russia surprised the world with a full-scale military invasion of Ukraine, marking the first major military conflict in Europe in decades. Those factors fueled a rise in volatility and pushed stocks lower in the first three months of the year. Broad market volatility began to [...]

Markets Again Overcome Pandemic Uncertainty to Hit New Highs Stocks overcame numerous headwinds during the past three months, including a resurgence in COVID cases, the Federal Reserve moving aggressively to end the current QE program, and a lack of additional stimulus from Washington, to hit new all-time highs in the fourth quarter and produce very strong returns for 2021. The fourth quarter started with a continuation of the volatility that we saw at the end of the third quarter, as in early October there [...]