Well, now that we’ve wrapped up another year, we hope your holidays were healthy and happy and wish you nothing but the best for 2023.

How did 2022 turn out? Wow, looking back at my letter a year ago, I wonder how I could be so right and so wrong at the same time! As I expected, the Fed changed direction and began to attack inflation by raising short term rates and, yes, the stock market took a hit from that, but…I missed the speed and severity at which the stock market and, even more so, the bond market would react. Basically, everything that I said would probably happen after August ’22 and into 2023, happened between the second week of January and June 17th, 2022! Since then it has been largely sideways with swings up and down but ending up in roughly the same place. We have experienced only the 4th year since 19761 in which the bond market ended up in negative territory and only the second time since 1931 in which the stock AND bond markets were negative for the year (1931 and 1969). Plus, of those 4 negative bond years, 2022 is the worst bond market of all of them.

It has been difficult to be sure. However, you have all remained patient and steadfast. We have reviewed your long-term plans and remain confident that as this downturn passes, your plan will prevail.

Looking out into 2023, I strongly encourage you to continue in your patience. This will not end quickly. The economy has not rolled over and I believe there is more negative news coming (difficult corporate earnings, lower GDP numbers, probable layoffs and weaker employment numbers. In other words, all eyes expect to actually “see” a recession).

What is the bond market telling us? In my opinion, it is implying that some level of recession is imminent, that inflation will be brought under control, and that long term rates will likely come down, perhaps by quite a bit. Think of the interest rate on the 10-year treasury which is currently at 3.85%2. While the Fed may raise short term rates higher, longer-term rates will likely drop as we see more signs of weaker inflation and a slowing economy. That will result in lower long-term rates, mortgages, car loan rates, etc .

So, as for the bond market, every analyst, economist and strategist I have been reading lately feels confident that 2023 should be a strong year in the bond market. (As long rates go down, bonds go up).

I feel that the stock market will continue its “up and down” sideways movement for some time (weeks, maybe months) but, once earnings show weakness and unemployment begins to tick up, that will indicate to me that we are near the end of this market correction and we will likely see the Fed hold off on further short term rate increases. At some point, once inflation shows clear signs of abating and the economy shows signs that it needs help, the Fed will reverse direction and lower short-term rates. This is the typical course of action and produces the typical business cycle. It gets us to the next step in that cycle of recovery and economic expansion.

There are reasons to be cautious and there are reasons to be optimistic about what the markets will be like 12 months from now at the end of 2023. We will make adjustments as needed and will sit tight for the Fed’s work to play out. It won’t start out easy but we will work together and focus on the long game for our financial planning as we do what we can to make 2023 a better year than 2022.

Thank you,

Chris, Anka and Matt


Chris Reaney, CFP®

Founding Partner

Managing Director

Wealth Manager


Steward Partners Global Advisory

145 Maplewood Ave, Ste 100, Portsmouth, NH 03801

Direct: 603-427-8859 |Cell: 603-944-0873 | Fax: 603.373.8210

Email: chris.reaney@stewardpartners.com

Team Website: HighwaterGroup.stewardpartners.com


1. JP Morgan 'Guide to Markets' U.S. 4QT2022, pg 44

2. FactSet as of 12.27.2022

The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates.  All opinions are subject to change without notice.  Neither the information provided, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.  Past performance is no guarantee of future results.


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