Without question, 2022 has been a challenging year for the psyche of investors. This year's quick launch in US treasury interest rates introduced pressure on financial markets with incredible speed. For example, one of the most commonly watched rates, the 10-year Treasury yield, closed at 4.2% at one point in mid-October.

The US index, comprised of thirty bellwether stocks, experienced its best month since 1976. A bellwether stock tends to show market leadership just like a sheep leading its flock with a bellwether tied around its neck. Last month's US equity returns were even more impressive, given that interest rates tied to economic activity also rose in October.

Charles H. Dow described the stock market as a series of ocean tides that go in and out. One of the basic tenets of the prominent news columnist’s work near the end of the nineteenth century was to approach markets based on various trends, with the most important one being the primary trend.

Market valuations pivoted in the middle of August after having a stretch of gains from the fifty-two-week lows in June. The Federal Reserve’s annual summit in Jackson Hole, Wyoming concluded and the Fed had some harsh words for markets. In addition, a couple of new fiscal initiatives occurred in August.

The first estimate showed that the US economy contracted again in the second quarter of this year. That marked a second consecutive decline in real expenditure growth. Generally, the economy is said to enter a recession when GDP falls in back-to-back quarters. However, it's a bit more complicated than that, as the National Bureau of Economic Research (NBER) weighs many economic factors before officially dating a recession's start date.

Significant recent market events include a strengthening US dollar, inverted sections of the yield curve, and swift commodity price declines. These things, taken together, may signal that a recession lies ahead but, just as importantly, they may also indicate that inflation has peaked.

The odds of a recession have increased in the United States. The interest rate correction from ultra-low borrowing costs and the decline in stock prices as of late flash that the risk of falling into a recession is rising.

The road out of the pandemic has been a rocky ride in terms of monetary policy and investment markets. Public equity valuations and fixed coupon bonds have recently been experiencing the effect of a capital rate adjustment.

The Taylor rule is a policy tool used in monetary policy. It consists of three different components to help guide interest rate decisions in the economy. The first expression represents the natural rate of interest that should exist in harmonious equilibrium.

Recent experience in market investments has moved down from the highs as a new economic reality takes over. Material shifts affecting economic activity are not limited to but include the Ukrainian crisis and record inflation that warrants a more restrictive role of money in the marketplace.

Stocks pulled back in January as investors prepared for the interest rate takeoff. As a result, US large-caps rolled backward to end with losses in the mid-single-digits. Small-cap losses were even more significant in size.

The Santa Clause rally happened, and US stock indexes pushed higher to close 2021 with impressive gains. In summary, and according to public data given out by S&P Global, large-cap stocks returned more than small-cap stocks in 2021, and small-cap beat out mid-cap.

Big media has refocused coverage on the new coronavirus variant. Research in the pharmaceutical industry is already underway to obtain the gene sequence of Omicron. As a result, vaccines and booster shots will likely soon come with an antibody to act as a line of defense against the variant. Still, investors sold the news as renewed shutdowns and restrictions became prominent concerns. However, President Biden was quick to discourage shutdowns as an acceptable policy response to Omicron.

The economy's real growth supposedly slowed down to a tepid two percent annualized rate in the third quarter. However, the markets thought the annualized rate would come in above two and a half percent so, when it didn't, investors took action, and bond market yields reacted.

Marketplace valuations have reached new heights, and interest rates have revisited lows. So naturally, it is normal to experience more uneasiness and weariness around the limits of financial returns, creating heightened awareness in all those involved. Indeed, anything vaguely connected with the delta-variant, inflation, credit defaults, government deadlocks, and challenging labor markets can captivate the public right now.

The US Congress is working on a 3.5 trillion dollar package of spending programs and tax breaks to support a broader range of public investments.

Another fascinating market dislocation is happening in the government debt markets of the financial economy. This supply and demand imbalance can affect prices on almost every asset, and is currently forcing long-term interest rates back down.

Congress seems close to passing another trillion-dollar bill that would invest in the infrastructure of the economy.

As of late, the stock market has experienced a meaningful style rotation. Throughout much of the previous five months, the returns on the value style have accelerated while the returns on the growth style have stalled out.

The US stands at a critical juncture concerning the future use of the deficit. It can support popular social programs that add less direct productivity to the economy or invest in projects that can create immediate jobs.