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Second quarter market review with Kevin Barr

July 19, 2022
clock 8 MIN READ

Record-setting interest rate hikes, multi-decade high inflation and fears of another COVID-led slowdown in China set the stage for a difficult quarter.

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- Hi, I'm Kevin Barr, head of SEI's investment management unit. Over the next few minutes, I'll provide an overview of the global financial markets and our perspective on them. Record setting interest rate hikes, multi-decade high inflation, and fears of another COVID led slowdown in China set the stage for a difficult quarter. US and global shares moved in lockstep, tumbling through mid-May. An attempted recovery was followed by further declines. Stocks closed the quarter with double digit losses. Value stocks held up better than gross stocks across both large and small cap markets. The loosening of COVID lockdown restrictions in June propelled China to a strong monthly gain, which tipped it into positive territory for the quarter. That was the only bright spot among major equity markets. Emerging market shares fared better than their developed market counterparts on China's rebound even with Brazil, and most of Latin America tumbling sharply as commodity prices fell. While inflation continued to take a toll on consumers the commodities price decline that began in mid-quarter provided some relief. Crude oil and natural gas hit highs in early June before sliding through the end of the quarter and into July. Weed prices hit a high in mid-May before seeing double digit declines. Interest rates on government bonds rose across all maturities in the US, UK and Euro zone. During the second quarter, the central banks tried to slow the global economy to fight inflation. The inverse relationship between bond rates and prices, meaning that bond prices fall when rates increase, was on full display. Fixed-income performance ranged from relatively modest declines for government bonds to more severe losses for riskier emerging market and high yield bonds. The second quarter was difficult for investors and there is no doubt that rising interest rates will further slow economic growth. While the consensus view points to an increasing likelihood of an economic recession, and additional price declines in both equity and fixed-income markets we think the worst is behind us. Still, in these uncertain times, we believe a focus on diversification, fundamentals, and sound planning matter more now than ever. On behalf of everyone at SEI thank you, as always, for your trust and confidence.

Important Information

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Positioning and holdings are subject to change. All information as of the date indicated.  There are risks involved with investing, including possible loss of principal. This information should not be relied upon by the reader as research or investment advice, (unless you have otherwise separately entered into a written agreement with SEI for the provision of investment advice) nor should it be construed as a recommendation to purchase or sell a security. The reader should consult with their financial professional for more information.

Statements that are not factual in nature, including opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice.  Nothing herein is intended to be a forecast of future events, or a guarantee of future results. 

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