Five financial trends that 2022 killed

FINANCIAL markets’ nastiest surprises often come when something that is taken for granted is suddenly called into question – whether it’s rising tulip-bulb prices, functioning banks or a lockdown-free existence. Investors had a tough time in 2022. But given how many trends changed direction over the course of the year, the real surprise is that it was not nastier. Here were the most important reversals.

End of cheap money

Future financial historians, looking back at the 2010s, will marvel that people really thought interest rates would stay near zero forever. Even in 2021, respectable investment houses were publishing articles with titles such as: “The Zero: Why interest rates will stay low”. Borrowing costs had been falling for decades; the combination of the global financial crisis of 2007-09 and the Covid-19 pandemic seemed to have permanently glued them to the floor.

In 2022, persistent high inflation dissolved the glue. America’s Federal Reserve embarked on its swiftest tightening cycle since the 1980s, raising the target range for its benchmark interest rate by more than four percentage points, to 4.25-4.5 per cent Other central banks followed in its wake.