December 2022 capital markets outlook and risk metrics

Major equity and bond markets finished 2022 in negative territory, marking one of the worst years for investors since the early 1980s. However, many markets showed some resiliency with positive performance in the second half of the year.
China’s relaxation of its Zero COVID policy helped support equity market rallies on the hopes of a re-opening boom after a long period of underperformance.
US equity markets lagged Non-US equity markets in December as the ECB’s gradualist approach to interest rate hikes helped support better than expected economic growth.
With the notable support from China’s equity rally and a weaker US dollar, emerging markets outperformed US stocks.
Value stocks took the lead in December, proving more resilient than growth stocks both in and outside of the US.
In spite of slowing inflation, major fixed income markets sold off in December and finished the year in double digit negative territory.
Short-term rates continued to climb due to the Fed’s 50 bp rate hike in December, leading to a steep inversion of the yield curve.
Natural resource stocks and commodities sold off in December but retained solid positive returns for the full year.