US equities enter bear market

Equity markets suffered their worst week since March 2020 as the flagship S&P 500 index slid into a bear market last Monday, before finishing the week 24% off its record high set in the first week of 2022, writes Ian Slattery. 

Bonds offered little comfort as yields in the US rose further as the Federal Reserve acted once again. Following the higher-than-expected inflation print on Friday 10th June, interest rate expectations shifted higher once more, which culminated with the Fed raising by 75 bps on Wednesday. This was the largest move in 27 years as the committee also signalled that the pace of tightening would remain aggressive.

The impact of higher rates in the US have already been felt in the housing market. The average 30-year mortgage rate now stands at 5.8% - the highest since the financial crisis. The knock-on effect in demand, and supply, has been immediate with housing starts falling over 14% in May with building permits slipping 7%.

Outside of the housing market, general retail sales also decline -0.3% throughout May. In the UK, the Bank of England moved rates higher by 25bps to 1.25%. The committee voted 6-3 in favour of the move, with the three dissenting members opting for a 50bps hike.

UK inflation is forecast to hit 11% by the end of the year, one of the highest rates in the developed world.

Eurozone bonds experienced some relative respite last week as the ECB attempted to assuage concerns over periphery borrowing costs (namely Italy). How the ECB navigates a path of higher interest rates without causing large divergence in individual member borrowing costs remains a key policy challenge.

In Asia, the Chinese economy continues to improve following the latest COVID lockdown. Although some key metrics (e.g., retail sales) are still in contraction territory, recent releases have been better than expected – providing some cause for optimism within the region.


Global stocks were down last week by -2.6% in euro terms and -2.3% in local terms. Year-to-date global markets are down -15.6% in euro terms and -22.4% in local terms.  The US market, the largest in the world, was down -2.2% in euro terms and -1.9% in local terms.

Fixed Income & FX

The US 10-year yield finished at 3.23% last week. The German equivalent finished at 1.63%. The Irish 10-year bond yield finished at 2.31%. The Euro/US Dollar exchange rate finished at 1.05, whilst Euro/GBP finished at 0.86.


Oil finished the week at $109 per barrel and is up 56.9% year-to-date in euro terms. Gold finished the week at $1,840 per troy ounce and is up 8.8% year to-date in euro terms. Copper finished the week at $8,967 per tonne.

The week ahead

Monday 20th June

US markets are closed for the Juneteenth holiday.

Wednesday 22nd June

UK CPI and eurozone consumer confidence go to print.

Thursday 23rd June

US, eurozone, and UK PMIs are all released.

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