Written by Mark Jones

LONDON (Reuters) – Trillions of dollars have wiped out global stocks, bond market tantrums, currencies and commodities are rampant, and a few crypto empires have collapsed — 2022 may have been the most turbulent year investors have ever seen, and for good reason.

Calculating final numbers is helpful but doesn’t come close to telling the whole story.

Yes, global equities are down $14 trillion and heading into their second worst year ever, but there have been close to 300 interest rate hikes and a trio of 10% increases in that time which makes the volatility freakish.

The main drivers were the war in Ukraine, along with rampant inflation as global economies emerged from the pandemic, but China remained constrained.

US Treasury bonds and German bunds, the benchmarks for global borrowing markets and traditional assets in turbulent times, lost 16% and 24%, respectively, in dollar terms.

Jeffrey Gundlach of DoubleLine Capital, dubbed the “Bond King” of the markets, says conditions have gotten so ugly at some points that his team has found it nearly impossible to trade for days at a time.

“There was a buyer’s strike,” he said. “Which is understandable because prices were just going down until recently.”

Graph: Seismic Shifts – https://www.reuters.com/graphics/GLOBAL-MARKETS/egpbyyqjdvq/chart.gif

The drama began once it became clear that COVID would not shut down the global economy again and the most powerful central bank in the world, the US Federal Reserve, was serious about raising interest rates.

Ten-year Treasury yields jumped to 1.8% from less than 1.5%, down 5% from the MSCI World Equity Index in January alone.

Now that yield is at 3.68%, stocks are down 20% while oil prices rose 80% before giving up entirely. The Fed delivered increases of 400 basis points and the European Central Bank logged 250 basis points, despite saying this time last year it was unlikely to budge.

The dollar is up nearly 9% against the world’s major currencies, and 12.5% ​​against the Japanese yen even after the Bank of Japan’s last-minute surprise this week gave the yen a boost.

In emerging markets, Turkey’s monetary policy and inflation problems cost the lira another 28%, but its stock market is the best-performing in the world.

A hard-pressed Egypt devalued its currency by more than 36%. The Ghanaian cedi fell 60% after joining Sri Lanka in default. Although down significantly from its June highs, the Russian Ruble remains the second best performing currency in the world supported by Moscow’s capital controls. It was initially broken after the invasion of Ukraine.

Graph: Dollar strength dominates currency markets – https://www.reuters.com/graphics/GLOBAL-MARKETS/zdpxddkarpx/chart.png

Robert Alster, Chief Investment Officer at Close Brothers Asset Management, said Robert Alster, who, like many, noted the hit to sterling and British bond markets lasted in short order. – Government Lease Truss living flirting with unfunded spending.

Ten-year Treasury yields rose by more than 100 basis points and the pound lost 9% in a matter of days – moves of rare size in major markets.

“If you sell it wrong, don’t be surprised if it falls like a cup of cold,” said Michael Hewson, a veteran analyst at CMC Markets.

technical problems

The price hike also cut $3.6 trillion from the tech giants. Facebook (NASDAQ:) and Tesla (NASDAQ) both bleed more than 60% while Alphabet (NASDAQ:) and Amazon (NASDAQ:) are down 40% and 50%, respectively.

Chinese stocks have seen a late rally on signs that the days of the COVID-19 policy are numbered but still down 25% and emerging market ‘hard currency’ government debt will post its first ever consecutive loss.

Chart: $14 Trillion Wiped Out of Global Equity Value – https://fingfx.thomsonreuters.com/gfx/mkt/znvnbbqdbvl/Pasted%20image%201671611348378.png

Initial public offerings and bond sales fell almost everywhere but the Middle East, while commodities were the best performing asset class for the second year in a row.

A rally of more than 50% is generally the best in that group, albeit largely due to the war in Ukraine raising prices by 140% at one point.

Growing recession fears combined with the West’s plan to stop buying Russian oil means giving back the full 80% it made in the first quarter, as well as wheat and corn.

Chart: War Prices – https://fingfx.thomsonreuters.com/gfx/mkt/lgvdkkzjmpo/Pasted%20image%201672392863703.png

The cryptocurrency market has been more chaotic. The year 2022 ends with a heist with its combination of cheap money and leveraged bets.

The prominent cryptocurrency has lost 60% of its value, while the broader crypto market has shrunk by $1.4 trillion, following the collapse of Sam Bankman-Fried’s FTX empire, Celsius, and supposed stablecoins, terraUSD and Luna.

“What has happened in global markets this year has been traumatic,” said Stefan Gerlach, Chief Economist at EFG Bank and Deputy Governor of the Central Bank of Ireland.

“But if central banks had not underestimated the rise in inflation so dramatically and had to raise interest rates, it would not have been disastrous.”

Graphic: An Exciting Year for Global Markets – https://www.reuters.com/graphics/GLOBAL-MARKETS/lgvdkkajzpo/chart.png