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A SWOT Analysis will identify internal strengths, weaknesses, external opportunities and threats to each component of your insurance company or government risk pool's investment process.
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Quarterly Investment Review: Q3 2022View PDF
After a rally in July, both shares and bonds turned lower and registered negative returns for Q3. Any hopes of interest rate cuts were dashed as central banks reaffirmed their commitment to fighting inflation. The Federal Reserve, European Central Bank and Bank of England all raised interest rates in the quarter.
US equities fell in Q3. The communication services sector, including both telecoms and media stocks, was among the weakest sectors over the quarter, along with real estate. The consumer discretionary and energy sectors proved the most resilient. In July, the market had started to focus on the possibility of interest rate cuts from the US Federal Reserve (Fed) in 2023, given concerns about slowing growth. However, such hopes were dashed at August’s Jackson Hole summit of central bankers, where the Fed reaffirmed its commitment to fighting inflation. This sent stocks lower in the second half of the quarter.
The heightened market volatility during third quarter continued as central banks and investors continued to grapple with persistent inflation amid a slowing growth backdrop. Government bond yields were generally higher and credit spreads wider across the global market, weighing heavily on market returns. Across global credit, returns were poor as the market drawdown continued with credit spreads widening amid fears that tighter monetary policy may undermine further economic growth prospects.