In 3Q23, investors started to accept the reality of the “higher for longer” interest rate regime. The realization that central banks have not yet declared victory in the war on inflation and years of excessive borrowing by global governments fueled a surge in interest rates around the world. As a result, a modest valuation correction began in global equities as investors started to accept the “higher for longer” rhetoric that global central banks have reiterated time and time again. After the best start to a new year in the past four years (through 2Q23), the MSCI AC World Index posted its worst quarterly decline in a year, the 10-year U.S. Treasury yield rose to the highest level seen since 2007 and even Japan’s 10-year Government yield rose to a nine year high.
Read the in-depth commentary here: Forty W Advisors - 3Q23 Market Commentary