2023 vs. 2022: mean-reversion dominates the picture, except for gold
Reading time:15 MIN
Current market commentary
In 2023, many things went differently than expected. At the beginning of January, the majority of economists were forecasting a hard landing for the US, i.e. a recession, and in view of this the motto was "cash is king". In the end, US GDP is likely to have risen by around 2.5% in 2023 amid declining inflation, a soft landing seems to be in sight and almost all asset classes outperformed cash. Nevertheless, the year was not easy. In addition to the regional banking crisis, the conflict in the Middle East and the low market breadth, the markets were dominated by the constant change in expectations on key interest rates. The fact that the yield on 10-year US Treasuries closed at exactly the same level as the previous year despite extreme fluctuations is a coincidence. 2024 is likely to be no less difficult: after the year-end rally, many investors are optimistic, expectations for both rate cuts and earnings are high and the US presidential election campaign is likely to cause volatility. The further potential for the markets is likely to be limited for the time being.
Short-term outlook
After two years characterised by inflation and rising key interest rates, investors are likely to focus on interest rate cuts on both sides of the Atlantic in 2024. However, the first two weeks of the new year are likely to be quieter at the (monetary) policy level before the major central banks meet towards the end of the month. In addition, the Davos Economic Forum will take place from 15 to 19 January. New Year in China does not fall until 10 February this year. On Thursday, the Chinese and eurozone service purchasing managers' indices (PMI, Dec.) and initial jobless claims in the US (Dec.) as well as inflation data (Dec.) for France and Germany will be published. Retail sales (Nov.) in Germany, inflation data (Dec.) for the eurozone, US labour market data (Dec.), US new orders (Nov.) and the ISM service PMI (Dec.) will follow on Friday.
2023 vs. 2022: mean-reversion dominates the picture, except for gold
- In 2023, almost everything was different. The winners from 2022 became losers and the losers became winners. The only anomaly here was gold. The pre-cious metal has posted gains in euros without exception since 2018.
- The rotation was sharpest among the biggest losers of '22, with the Nasdaq-100 posting its best year since 1999 thanks to AI hype after falling 33%. Bitcoin gained almost 160% after -64% in the previous year. Brent oil, previously up 51%, suffered from China, weak manufacturing and high supply.
