What’s in store for financial markets in 2023? Persistently high inflation, tightening financial conditions, Russia’s invasion of Ukraine, and the COVID-19 pandemic still rumbling on in China are all factors that made 2022 such a unique year and these will continue to be in play next year. Stock markets have endured a turbulent 2022 as central banks began aggressively tightening monetary policy, whilst a resurgent US dollar buoyed by rising US Treasury yields weighed on risk appetite in general. Big tech got found wanting, and speculative tech got found out. The tide went out of the crypto market, too, revealing those who, in the words of Warren Buffet, had been swimming naked.

The war in Ukraine led to a surge in commodity prices, further stoking the inflation that too-easy monetary and fiscal policy had sparked. Perhaps the most salient trend in 2022 was the emergence not just of inflation but of a self-sustaining inflationary dynamic that central banks were unable to control. This remains the big fight of 2023.