2022 was a grinding year in the markets. The Fed and the ECB hiked rates hard to counter inflation, the Ukraine war unsettled some well-established markets, and a rapid decline in US-China relations all ushered in a new era in global financial markets. US and European GDP growth decelerated from the post-COVID stimulus sugar high, with the US down from +5.9% in 2021 to +2.1% in 2022, while Europe went from +5.3% in 2021 to +3.3% in 2022 with the biggest economy Germany lagging at +1.9% in 2022.1 The year ended with widespread losses across both rates and equities, with for example 10-year Treasuries down -16.2%, US high yield down -11.2% and US equity markets down 18.1%.2 The year was punctuated by short fierce rallies in July and November—and once again in early 2023 at the time of this writing.

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