• Equities rose higher, breaking a three-quarter losing streak, as investor sentiment was boosted by the slower pace of rate hikes in December, likely peak inflation and China’s pivot from its zero-COVID policies.

  • Economic growth slowed but remained positive, supported by the strong labor market, recent decline in gasoline prices and remaining pandemic-related fiscal stimulus, which boosted consumer demand. Nonetheless growth remained challenged by persistently high inflation and geopolitical tensions, which continued to exacerbate supply chain issues.

  • U.S. inflation fell from 7.7% in October to 7.1% in November, year over year (YoY). While the decline in inflation is welcome, it remains well above the target of the Federal Reserve (the Fed) and continues to weigh on consumer sentiment. The Fed hiked interest rates by 75 basis points (bps) in November and 50 bps in December and is prepared to front-load rate hikes until inflation materially lowers near the Fed’s 2% target.

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