If you recall, 2022 was supposed to be a year of redemption and prosperity. After the ugly coronavirus fiasco, the economy was finally reopening. The general belief was that the resurgence of economic activity was going to bring a new boom and a new cycle of prosperity.
But then something unexpected happened. On the first day of market trading, January 3, 2022, the S&P 500 hit a closing peak of 4,796. On Thursday, just over a year later, the S&P 500 closed at 3,808. Down over 20%.
Over this duration, the yield on the 10-Year Treasury note spiked from 1.66% to 3.7%. In other words, Uncle Sam’s borrowing costs have more than doubled. At the same time, transitory inflation proved to be enduring. And gross domestic product (GDP) went negative for the first two quarters of 2022.
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