Market Pulse - The week in review
Duncan Presant - Jan 04, 2023
During a Holiday week full of travel headaches due to severe storms across North America, markets were rather calm, with little movement across rates, equities, and currencies.
THIS WEEK’S RECAP:
▪ During a Holiday week full of travel headaches due to severe storms across North America, markets were rather calm, with little movement across rates, equities, and currencies.
▪ Optimism for a ceasefire in Ukraine was unfortunately short-lived with news of rising Russian military aggressions towards major Ukrainian cities. This, combined with Russia’s pushback against G7-led oil price-caps, led to mild gains in the energy complex over the week.
▪ This uneventful week on markets caps a difficult year for investors, which see both equities and fixed income deliver strongly negative returns. The aftershocks of the pandemic continue to destabilize our markets and economies and will continue to do so for some time, but with a dampening impact.
ON DECK FOR NEXT WEEK:
▪ The first week of the New Year will bring a new round of important economic insights. A key leading economic indicator, the Purchasing Manager Index (PMI) will be released on both sides of the border, as will the latest employment statistics for December. Europe will release their latest inflation data – a key piece of data for an ultra-hawkish ECB.
▪ As difficult as 2022 has been, it has created the conditions for a much more compelling investing environment going forward. Equity valuations have normalized, interest rates are significantly higher and credit spreads are wider. While there is still a lot of uncertainty on where inflation will land and how significant the ongoing economic slowdown will be, investors are now paid significantly more to accept risk than they were at the same time last year. Moreover, the expected returns of several asset classes are now attractive, enabling investors to build robust and better diversified portfolios.
▪ Finally, we would like to end the year by wishing you all Happy New Year! May the new year bring you joy, health, and prosperity.
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