Markets in 2023: It’s All About Inflation

To say that 2022 was a disappointing year for investors is an understatement. US stocks gave up more gains to close the year than they have since the height of the Global Financial Crisis.

And even bonds, which tend to move higher when stocks fall, saw their worst declines in decades in 2022. And while some investors sought out cash as a haven of sorts, double-digit inflation and a rising cost of living ate into the purchasing power of most savers.

Ultimately, investors had no safe place to hide from this year’s economic and market carnage, and it’s arguably all the Fed’s fault.

So, if the Fed is engineering an economic slowdown that led to the recent market selloff, what needs to happen before the central bank finally starts cutting interest rates to give the markets a chance to rally once again?

In today’s episode, we discuss the three conditions that likely need to play out before the Fed changes its policy stance that could pave the way for markets to close on a higher footing in the year ahead.