Quarterly market outlook - 4th Quarter, 2022

Our investment strategists provide the Edward Jones perspective on the latest economic activity and what it may mean for investors.

The Quarterly Market Outlook provides investors with our perspective on recent activity in the capital markets. The Edward Jones Investment Policy Committee offers its viewpoints on the U.S. economy, equities, the bond market, international markets and asset classes, as well as a special topic of interest to investors each quarter.

These aren’t short-term predictions. Rather, this is Edward Jones’ perspective on market and economic topics designed to help you make decisions affecting your long-term financial strategy. As you read through each topic, you'll find specific actions you can discuss with your financial advisor.

Second quarter in review

Asset class returns were broadly negative for the quarter. Investors moving into safe-haven assets such as the U.S. dollar pushed the value of the greenback to historically high levels.

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Economic outlook

Lingering inflation pressures, the aggressive central bank rate hikes and a cooling housing market have increased the risks to the North American economy. Yet a large amount of monetary tightening has already been priced in at a time when inflation may well have peaked.

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Equity outlook

The stock market revisited its lows for the year, with the S&P 500 down 20% to start Q4 while the TSX continues to hold up better (down roughly 16% from the April highs). There is no official timer on sell-offs, but bear markets that are accompanied by mild recessions or a lack of financial shocks tend to have a shorter shelf life.

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Fixed-income outlook

Fixed-income markets continued to take their cues from the Federal Reserve and Bank of Canada in Q3, as yields moved higher and bond prices moved broadly lower. The U.S. 10-year Treasury yield closed the quarter near 3.80%, while the Canadian 10-year yield closed near 3.15% levels, both heading towards highs of the year.

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International outlook

Overseas equities (ex-U.S.) have lagged this year amid a stronger Canadian dollar and a material slowdown in global growth. Challenges persist, but lower valuations support overseas portfolio allocations.

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Mid-term elections: 3 Key Questions

  1. What are midterm elections, and why are they significant? The U.S. midterm elections — scheduled for Tuesday, Nov. 8 this year — occur in the second year of the four-year presidential cycle and typically focus on the legislative arm of government, the House of Representatives and the Senate
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Strategic asset allocation guidance

Our Strategic Asset Allocation represents our view of balanced diversification for the fixed income and equity portions of a well-diversified portfolio based on our outlook for the economy and markets over the next 30 years.

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Quarterly market outlook - Full report from Edward Jones

Download the entire quarterly market outlook report here.

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