On unprovoked war in Eastern Europe threatening an energy crisis, fresh COVID-19 waves in China and major global central banks going nuts with rate hikes to curb runaway inflation were among the big themes of 2022.

What happened: The year was a tough one for investors as financial assets were sold off indiscriminately, with quality and safe assets not spared either. Stocks were among the hardest hit due to their risky bets.

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The US market led from the front, posting massive losses and dragging down averages elsewhere.” After a year of macroeconomic and geopolitical shocks, investors reacted by downgrading the S&P500 price-to-earnings (P/E) ratios are seven times higher, while some speculative growth segments have plunged 70-80% from their highs,” JPMorgan said recently Report.

It all started with fears of rate hikes and the likely impact on sluggish economic growth. Inflation has worsened since late 2020, when the impact of monetary and fiscal stimulus implemented in the wake of the first wave of COVID-19 began to be reflected in prices.
US inflation accelerated to a new 40-year high of 9.1% in June and has slowed slightly since then.

Source: US Bureau of Labor Statistics

Inflation was not a US-specific problem as the background was similar in most other global economies and price pressures reared their ugly heads in all countries. Global central banks were left with no choice but to start raising rates at an accelerated pace, signaling a hard landing.

After a cumulative increase of 425 basis points, the Fed fund rate is currently between 4.25% and 4.50%. That Bank of Japanwhich was the only central bank among developed countries to tarnish, recently announced some maneuvers in interest rates, making a change to bond yield controls that would allow long-term interest rates to continue to rise.

That Russia-Ukraine War which began in late February threw up most well-conceived political plans when…