31 October, 2022

Another difficult quarter for stocks and bonds

Executive Summary


  • Global markets continued their downtrend in the third quarter. Fed Chair Powell’s speech at Jackson Hole in August dashed hopes that the Fed would consider pausing its tightening cycle. After recovering in July, both equity and bond markets broke through June lows. 
  • As a result of hawkish Fed guidance, bond markets ratcheted up expectations for this cycle’s terminal interest rate from 3.25% at the end of July to 4.5%, which rippled through the yield curve. The 10-year Treasury yield briefly reached 4% in late-September, ending the month at 3.8%1.
  • The Bloomberg Aggregate Bond Index fell a further 5% in Q3, leaving it down 15% this year. The MSCI ACWI index fell 7% for the quarter and 25% this year. The simultaneous drawdown in both stocks and bonds has left a traditional 60/40 portfolio down 21% year-to-date1.

1. Source: Bloomberg; as of 9/30/22

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