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2022: No Love Lost

06 January 2023   |  

Merriam-Webster’s word of the year for 2022: gaslighting. After 2021’s market resurgence from the worst of pandemic-lows, investors were left feeling like a spurned lover in 2022—misled, manipulated and filled with self-doubt from the volatility this year. Following the strong economic progress made in 2021, heightened inflation and subsequent unease regarding rising interest rate hikes from central banks around the world plagued global markets in 2022. A myriad of macro issues also beleaguered markets throughout the year, including an extended conflict between Russia and Ukraine that also caused economic disruption and repercussions for neighboring countries, ongoing tension between the US and China, China’s swift swing from its zero-COVID policy to its reopening, and tense political elections. Ultimately, the J.P. Morgan EMB Hard Currency/Local Currency 50/50 index lost more than 13% in 2022.

A knight in shining armor

Despite the largest decline in global debt in several decades in 2021, the world’s debt remained at nearly 250% of GDP (amounting to about $235 trillion) entering 2022. Given its goal of promoting economic success for all of its affiliate countries, the IMF worked throughout 2022 to enter into agreements on new or extended funding to support the economies of several emerging markets countries, including the Republic of the Congo, Suriname, Lebanon, Barbados, Zambia, Malawi, Egypt and Ghana. While these countries face an uphill battle thanks to continued stress and high levels of debt, we applaud their utilization of available resources to regain more solid footing. Although IMF support will provide assistance to some, we anticipate that 2023 will usher in a deluge of new issuance as the higher rate environment in 2022 led to procrastination for many sovereigns and corporates. Subsequently, many will need to come to market for financing, or to roll debt in 2023, albeit at heightened costs.

All isn’t fair in love and war

After peaking in the first half of 2022, commodity prices largely gave back much of their gains by the end of the year. While energy and metal prices have normalized, some grains (such as rough rice and corn) remained elevated relative to January 2022 levels. In addition, the ongoing conflict in Ukraine and its subsequent effects on surrounding countries continues to linger, creating the potential for increased volatility in commodity prices in 2023 as Russia weighs its next strategic moves.

As we reflect on 2022, we recognize that it was not all roses. That said, the launch of the EMsights Capital Group at Artisan Partners brought much excitement and success, and we look forward to navigating the landscape in 2023 to identify attractive investment opportunities. We wish you all a happy and prosperous new year!



The J.P. Morgan (JPM) EMB Hard Currency/Local Currency 50-50 is an unmanaged, blended index consisting of 50% JPM Government Bond Index-Emerging Market Global Diversified (GBIEMGD), an index of local-currency bonds with maturities of more than one year issued by EM governments; 25% JPM Emerging Markets Bond Index-Global Diversified (EMBIGD), an index of USD-denominated bonds with maturities of more than one year issued by EM governments; and 25% JPM Corporate Emerging Market Bond Index-Broad Diversified (CEMBIBD), an index of USD-denominated EM corporate bonds. Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. The Index is used with permission. The Index may not be copied, used, or distributed without J.P. Morgan's prior written approval. Copyright 2023, J.P. Morgan Chase & Co. All rights reserved.

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