Besides Q4 events, we have also evaluated the past year 2022. The main topic of 2022 was inflation and the associated reaction of central banks, or the dynamics of interest rate growth. The most anticipated recession in history is most certainly about to come this year. Never before in the modern history of financial markets has the percentage expectation rate of the arrival of a recession been so high (more than 70%).
Q4 2022 Highlights:
- The inflation rate dropped to 6.45%. Disinflation continued throughout Q4 2022 and had a positive effect on market sentiment. Rigid costs and falling prices for goods and services indicate pressure on companies’ profits.
- Interest rate risk remains relevant in 2023. The robust U.S. labor market allows the Fed to tighten financial conditions. At the same time, it is clear that the economy is slowing down (ISM-PMI) in contraction.
- The US dollar experienced its second-worst quarter in 20 years. The decline in relative interest rate differentials is causing a reversal of the trend in the currency markets.
