The first quarter of 2022 was one most investors would prefer to forget. Except of course those trading oil, metals or grains, who would have rejoiced in Brent crude soaring over 50%, and a 30% gain for the CRB commodities index.
It was less rewarding on equities; with a 5% loss, the S&P 500 looks set to break a seven-quarter winning streak. Nasdaq euro zone stocks fared worse while Chinese markets had to cope with renewed COVID-linked lockdowns in many cities.
Bond markets hit milestones unseen, in some cases, for decades. The 140 basis-point rise in two-year U.S. yields is the biggest since mid-1984; the German equivalent will post its largest quarterly rise since 2011.
Unsurprising, given central bankers’ acknowledgement that inflation is not after all transitory and interest rates need to rise. Global inflation will hit 6.3% this quarter, the fastest rise in a quarter century, JPMorgan estimates.
Finally, pity those who failed to exit Russia investments on time — with the country being ejected from equity and bond indexes, they will need to mark their holdings to zero.