The report described 2022 as the year in which the era of 'free' money ended. A cryptocurrency market that had quadrupled in size in 2021 fell sharply, and technology and growth stocks sold off. According to a bank's analysis cited in the report, six large US companies accounted for a third of the MSCI World Index's 19.5% decline in 2022. The FTSE 100 was the only major market index to finish the year in positive territory, narrowly, helped by its weighting towards natural resource companies.
The report compared the start and end of the year. US inflation rose from 2.5% to 7.1%, via 9.1% in June 2022; the Federal Funds rate rose from 0-0.25% to 4.25-4.50%; the US 30-year mortgage rate rose from 3.7% to 7.2%; the 10-year Treasury yield rose from 1.6% to 3.8%; and the median forward 12-month multiple on the S&P 500 Index fell from 21.3x to 16.0x. The combined market value of the Bloomberg Global Aggregate Bond Index and the MSCI World Index fell by USD 36 trillion in the first nine months of 2022.
US inflation was 7.1% in November, down from 7.7% in October and 8.2% in September. Oil was at its lowest in over a year and below its level before Russia's invasion of Ukraine, fertiliser prices were down more than 40% from their peak, and US producer prices were declining year on year. The S&P 500 Index rose 5.5% on 10 November. In a monthly survey cited by the report, investor cash levels were the highest since April 2001.
The International Monetary Fund forecast global GDP growth of 2.7% for 2023, against 3.2% for 2022 and 6.0% in 2021. Central banks in Australia, Canada and New Zealand had raised rates by less than anticipated at recent meetings. US weekly jobless claims were at their highest since February, while unemployment remained low, and US households held USD 1.4 trillion of savings. The report also discussed the outlook for inflation, interest rates and recession in 2023.
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