Market Ethos - Stuck in a moment


If you take a step back from the day-to-day market gyrations, it appears we are stuck. In 2021, both the TSX and S&P rocketed higher on the back of continued stimulus, solid economic growth and low yields — the perfect combination for a very investor-friendly market.

2022 saw a reversal in these factors, as short-term rates jumped higher with central banks hiking to combat inflation. Longer yields rose too as economic growth continued. While earnings growth remained decent, higher yields caused the market multiple (valuations) to come down, resulting in a rougher market for investors in both equities and bonds. But since rate expectations and yields plateaued, the stock market has become stuck, oscillating within a narrow range. For the S&P it has been 3,800-4,200, and 19,500-21,000 for the TSX.

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