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‚Äôs 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.