Winter is approaching and Christmas is approaching, 2023 turning from the pessimism of the beginning of the year to the optimism of the end of adulthood. The biggest factor is that the market has moved from tightening to easing, and inflation, the number one enemy of central banks, has also dropped from the beginning of the year to the end of the year, causing the market to ring cheering bells. But behind such optimistic expectations, it is really like everyone Are you imagining a carnival all the way to new highs? Or is it necessary to carefully examine the business cycle and asset allocation amidst the cheers of everyone? Therefore, through this year’s review, we try to analyze changes in stock market valuations and bond yields, and then begin to outline investment layouts and opportunities.
23 The market looked bad overall at the beginning of the year
Looking back at the beginning of 2023, the capital market was almost unanimously optimistic about the market outlook. We must know that the previous year in 2022, the stock market fell from the high point at the beginning of the year for nearly a year. The reason was because the Federal Reserve excessively ignored the power of inflation. Under the influence of the Ukraine-Russia war in 2022, prices hit record highs, and the US CPI soared from 5% to 8.2%, forcing the Federal Reserve to violently raise interest rates from 0% to 4.25 at the end of 2022. %, finally suppressed inflation from the CPI high of 8.2% to around 5.5%. But the problem that comes with it is that all institutions predict that GDP will definitely decline, and the industrial cycle has also changed from oversold consumer electronics to inventory accumulation, to a boom in the service industry and a large number of labor shortages.
The U.S. economy is expected to continue to decline in early 2023
Twenty-three years later, the FED has continued to raise interest rates unchanged. From time to time, Powell also raised the Volcker Moment argument in the 1980s to warn the market not to underestimate the pressure of inflationary counterattack. When the Fed was then From 1980 to 1982, Chairman Paul Volcker raised the Federal Reserve interest rate to 20% in one fell swoop in order to combat an inflation rate of 10%, which later caused a decade-long recession in the United States in the 1980s. Therefore, in the first half of 23, we will see that Ball is unwilling to let go of the direction of interest rates. But after all, the extent of the FED’s interest rate hikes is no longer like the violent interest rate hikes in 2022, but the force has begun to shrink. From the beginning of 2023, 4.25% reached 5% in the middle of the year, with a total interest rate increase of about 3%. Therefore, the market began to speculate whether the Federal Reserve’s interest rate trends revealed a dovish tone in the process from accelerating interest rate increases to slowing interest rate increases. The US stock S&P 500 It started to bottom out at 3800 points at the beginning of the year and reached 4600 points in July.Ten-year Treasury Bond YieldIt has also reached the key water level of 4% (almost back to the position at the end of 2022). Therefore, the atmosphere in July 2023 is that the stock market is optimistic due to the concept of AI, while the bond market is preparing for a take-off wave of yield retracement.
Volcker moment in the United States in 1980, FED interest rate reached 20%, leading to recession. U.S. stocks in 2023Q2 survived the Silicon Valley banking crisis and continued to move higher.
U.S. debt downgrades, yields soar, market panic in third quarter
If nothing else, the surprise will come.When the market thinks that 23 years will be calm… Please refer to the explanation below for details.
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2024-01-02 00:40:03
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