Third Quarter, 2022
“September To Remember”
Playing off the slogan for a well-known automobile brand’s successful “December to Remember” year-end sales event, investment markets in 2022 had a “September to Remember” sale that was not so successful in attracting buyers with lower prices.
Here are just a few records that have been broken in this “September to Remember”:
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- Bank of America reported that government bond losses were the highest since 1920.
- At quarter-end, a more diversified bond index, the Bloomberg AGG, was down (16%), which was its worst performance since 1976.
- On 9/22/22, JP Morgan reported 88% of the US investment grade bond market was trading at a discount, but that can be good news when putting new money to work.
- Stock market returns are even worse. By quarter-end year-to-date MSCI world stock index outside the U.S. was down (28%), and the U.S. SP500 index was down (25%).
- Mortgage rates rose to 6.7% highest since July 2007 , but not nearly as high as 19% in the early 80s when inflation was 14.6%. Now the Federal Reserve is battling 8.5% inflation.
- The Federal Reserve has stated it will continue to raise rates, even risking recession, since unemployment is at such low levels. Oil prices plunged (23%) in 3Q22 and are closer to the levels before Russia invaded Ukraine.
Good news ahead? Markets have already priced in the bad news above. Bond yields are at their highest in more than a decade, savers are finally getting interest, and yes, investors can buy stocks & bonds on sale now, which can lead to better returns in the future. Investors who are patient can recover losses.
So stay tuned; we could have a “December to Remember” on the upside.
– Phyllis
