Is the Crypto Winter Over?
No, it’s not over, but the worst of it is past us. After the liquid token market’s remarkable January, some called an early spring.
Currency
Review of Market Performance: Calendar Year 2022
Calendar year 2022 witnessed multi-decade record inflation and central banks responded with rapidly tightening monetary policy. Rising rates saw the correlation between bonds and equities turn positive, contributing to large declines across most asset classes. Funds flows diverted away from growth and momentum strategies, and yield curves flattened with the ten-year/two-year yield curve becoming inverted in most developed markets, signaling economic uncertainty ahead.
Market Matters: January 31, 2023
Risk assets broadly advanced in January, continuing their fourth quarter rally after a difficult 2022.
Market Matters: December 31, 2022
Risk assets closed a tumultuous year on a positive note in fourth quarter.
2023 Outlook: Currencies
We expect the US dollar to remain firm but with limited appreciation relative to 2022, given our view that it is near the end of its incredible multi-year run. We believe gold’s performance will improve and digital assets, in general, will not surpass prior highs, many of which were set in 2021.
Market Matters: November 30, 2022
Asset markets broadly advanced in November. The global equity rally continued as surging Chinese shares helped broader emerging markets outpace developed peers.
Market Matters: October 31, 2022
Risk assets rallied in October. Global equities recovered some of their steep third quarter losses, as developed markets topped emerging counterparts.
Market Matters: September 30, 2022
Risk assets declined again in third quarter. Global equities recorded the worst three-quarter decline since the 2008–09 Global Financial Crisis.
Can the Strong US Dollar Environment Persist?
Yes. The hawkish Federal Reserve and energy market challenges have contributed to a strengthening of the US dollar in recent quarters, and we expect that trends in both factors may continue to be supportive of the dollar in the short term. Nonetheless, on a longer horizon, historical precedents suggest that the dollar is approaching the end of a multiyear bull run.
Ethereum’s Merge Is a Transformational Event, but Don’t Expect Digital Assets Prices to Come Out of Their Slump
A major Ethereum blockchain software upgrade was successfully completed earlier today, marking a landmark event for the digital assets industry. The upgrade, known as the “merge,” changes how transactions are verified on Ethereum’s blockchain and dramatically improves its energy efficiency. While this is welcome news, we doubt this means the rout in digital assets prices is over in the near term, as macro headwinds continue to be the most important factor driving prices.