03 February, 2023

Markets started 2023 on an optimistic note. Equities, bonds and alternatives generally rose. Rates and spreads declined and equity market volatility fell to its lowest level in almost a year.


Positive market sentiment was helped by US CPI inflation falling for the sixth month in a row. It also seems to have peaked in other developed countries.


Equity returns were strong on receding inflation and falling interest rates. Fundamentals were otherwise unfavorable.


10-year yields in developed countries fell by 20-30 basis points over the month which led to positive returns for defensive fixed income. Falling credit spreads, especially for high yield, were an additional return boost for credit.


Downward momentum for the US dollar continued as it weakened against most major developed and emerging market currencies. Commodities prices were mixed over the month with oil and some industrial metals slightly higher and wheat lower. 

Rolling 12-months

A chart showing Consumer Price Index (Year-over-Year)

Source: Bloomberg; through 12/31/22

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