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A Quick Word on the Markets

We’re in the home stretch of an unpredictable year in the equity and fixed-income markets, primarily due to inflation and the impact of Russia’s invasion of Ukraine in February.


After years of waiting on significant inflation due to low-interest rates, consumer price inflation (CPI) has trended at 7.7% annually through November, which has caused the Federal Reserve to raise the Fed Funds rate beginning in March from .25% to 4%. However, as of this writing, CPI data released in December shows signs that inflation is showing signs of abating at 7.1% over the last twelve months.


While inflation is expected to moderate in 2023 as the pandemic “demand pull-forward” and related supply chain pressures continue to correct, we expect elevated inflation levels due to labor market wage pressures and rent as property managers turn over lease agreements over the next twelve months.


Year-to-date, the S&P 500 is down 14.97%, and the MSCI All-Country World Index is down 16.11%. A traditional 60% stock and 40% bond portfolio managed by Columbus Street is down roughly 10.5%, and a more aggressive 75% stock portfolio is negative at 11.6%. These performance numbers are for reference only; your portfolio’s performance will differ based on your customized portfolio asset allocation.


With all the volatility this year, the decline in asset prices has been relatively orderly. We expect continued volatility in the first half of 2023 as the economy slows due to the effect of higher interest rates on the economy and a widely predicted economic recession.

As always, we will review your portfolio and any necessary rebalancing or repositioning during our first meeting of the new year.

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