2022 Market Recap

A Data-Driven Breakdown of the Most Volatile Investment Year in a Decade

2022 was a defining year for global markets, driven by rapid interest-rate hikes, persistent inflation, and broad declines across asset classes. Long-duration bonds experienced some of the steepest losses in decades, falling 15% to 36% as yields surged and the cost of capital reset sharply higher. Inflation initially boosted nominal returns—adding +3.0% from inflation and +8.2% in nominal premium during February–March—but ultimately weakened real performance and increased volatility across equities, bonds, currencies, and commodities.

Equity markets showed a clear stylistic divide. Value stocks delivered +7.2%, outperforming growth stocks at +2.9%, while growth-heavy indices posted repeated double-digit monthly declines under tightening financial conditions. Energy emerged as the only major sector with consistent positive performance, supported by elevated commodity prices, strong cash flows, and low-duration characteristics.

At the same time, the U.S. dollar strengthened materially, pressuring major currencies such as the euro and yen and influencing global capital flows. Combined, these dynamics created a rare dual selloff in stocks and bonds and signaled a decisive shift toward a market regime defined by inflation, monetary tightening, and heightened investment risk—critical context for understanding what shaped market outcomes in 2022.