March 2022 capital markets outlook and risk metrics
May 2022
Global stocks and bonds generally posted negative returns for the first quarter of 2022 as the war in Ukraine and persistent global inflation pressures weighed on investor sentiment.
In March, US equities reversed some of the losses from earlier in the year as the US economy continued to signal resilient growth and consumer demand.
For both US and Non-US markets, there was little difference between value and growth stocks in March, though investors favored value stocks by a significant margin for the quarter.
Developed markets outperformed emerging markets, as investors repriced their concerns related to China’s growth outlook and US regulatory pressure on US-listed Chinese companies.
In March, the Federal Reserve hiked short-term interest rates to 0.5% but real interest rates remained negative. The speed and trajectory of interest rate changes will likely remain one of the most important drivers of the global capital markets in 2022.
Rising rates led to losses for most US and global bond markets as CPI hit 7.9% and PCE hit 6.4% over the last 12 months.
Inflation-oriented assets like commodities and public natural resources equities benefited from a surge in a broad spectrum of commodity prices in late February and March related to the war in Ukraine.
REITs and infrastructure stocks proved resilient during the first quarter of 2022 and offered strong returns in March.
The war in Ukraine continues to put upward pressure on food and energy prices, which has economic implications for developed and emerging markets.
Food and energy prices combined with COVID reopening pressures have pushed inflation to multi-decade highs in Europe and the US. This poses a challenge for policy makers struggling to cool inflation while supporting growth.