Second Quarter 2022 in Figures

June 30, 2022

Financial markets experienced a large shakeout during the second quarter of 2022. Central bankers around the world have concluded that the spike of inflation is not going to dissipate without monetary policies transforming to a restrictive stance, and even if that happens the environment is so greatly changed by the pandemic, Russian war, and legacy of globalization, technology revolution, and unstable politics that it is unclear that monetary restraint alone will be sufficient to restore price stability. Monetary policymakers promise to do whatever it takes including tolerating a recession in its quest.

A hallmark of the last bout of double-digit inflation was a weak dollar, but in a critical variation from that instance the U.S. enjoyed broad-based support during the second quarter and rose against all the currencies in the table below even though ten-year sovereign debt yields went up as much, if not more, than the 10-year U.S. Treasury yield in many other industrial economies. The notable exception has been Japan, where the Bank of Japan has given no verbal signal of any intent to lessen its ultra-loose stance. In other cases, long-term rates have climbed much more than central bank rates because forward guidance has laid out a path of considerably more central bank tightening during the second half of this year.

Equity markets but particularly the Nasdaq were badly hammered during the quarter. The price of oil, in contrast, posted a considerably smaller advance than in the year’s first quarter. In a colossal irony, Bitcoin, which has been marketed to investors as a haven in times of inflation and other great financial market shocks, lost over half its value during the quarter. Bitcoin retains enormous appeal for illegally obtained wealth, but it has failed this stress test among average investors for how it might perform in times of great uncertainty.

10-Yr Yield 03/31/22 06/30/22 2nd Qtr Chg
U.S. 2.39% 3.02% +63 Basis Points
Germany 0.54% 1.33% +79
Japan 0.20% 0.22% +2
U.K. 1.61% 2.23% +62
Canada 2.40% 3.22% +82
Switzerland 0.54% 0.97% +43
CB Policy Rate 03/31/22 06/30/22 2Q Change
Fed funds target 0.25/0.50% +1.50/1.75% +125 Basis Pts
ECB deposit rate -0.50% -0.50% 0
BOJ policy rate -0.10% -0.10% 0
BOE Bank Rate 0.75% 1.25% +50
Swiss 3M Libor -0.75% -0.25% +50
FX 03/31/22 06/30/22 2Q Chg in $
EUR/USD 1.1067 1.0484 +5.6%
USD/JPY 121.67 135.71 +11.5%
USD/CHF 0.9231 0.9547 +3.4%
GBP/USD 1.3135 1.2172 +7.9%
AUD/USD 0.7481 0.6902 +8.4%
NZD/USD 0.6949 0.6247 +11.2%
USD/CAD 1.2502 1.2873 +3.0%
USD/CNY 6.3400 6.6995 +5.7%
Equities 03/31/22 06/30/22 2Q Change
S&P 500 4530 3772 -16.7%
Nasdaq 14221 11029 -22.4%
Djia 34678 30775 -11.3%
Dax  14581 12784 -12.3%
Nikkei 27821 26393 -5.1%
Ftse 7567 7169 -5.3%
Canada TSE 21890 18850 -13.9%
Swiss SMI 12260 10741 -12.4%
Commodities 03/31/22 06/30/22 Mar Chg in $
Oil, $ per barrel 100.35 105.89 +5.6%
Gold, $ per ounce

Bitcoin

1937.44

$45539

1807.01

$18731

-6.7%

-58.9%

Copyright Larry Greenberg 2022.  All rights reserved.  No secondary distribution without express permission.

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