Press release
Tradeweb 2022 Annual Client Letter: Markets Put to the Test… Again
--News Direct--Dear Client, If 2020 and 2021 were tests of our resilience and resolve, this past year was a masterclass in macroeconomic and geopolitical
About this update from Tradeweb Markets Inc.
[{"type":"text","content":"--News Direct--Dear Client, If 2020 and 2021 were tests of our resilience and resolve, this past year was a masterclass in macroeconomic and geopolitical one-upmanship. Financial markets weathered the storm of an ongoing global pandemic, supply chain disruption and massive geopolitical unrest, while rising inflation and rapid-fire interest rate increases and a persistent threat of recession tested the resilience of our markets. With global consumer prices up 10.7%[1] so far this year and the 10-year U.S. Treasury yield nearly 200 basis points (bps) higher than it was in January – not to mention the historic moves we saw in UK Gilts during September and October – 2022 has not disappointed when it comes to keeping market participants on their toes.We’ve had a unique vantage point throughout this journey at Tradeweb. Across virtually every asset class we cover, from government bonds to munis to corporates to mortgage-backed securities to equities, we’ve seen historic milestones and fascinating responses from the markets to maintain efficient access to liquidity in challenging environments.Following are some of the most important developments we’ve tracked over the past year, which we think are critical turning points that will help shape the future of how markets respond to tests down the road.Inflation Rears its HeadThe biggest macro story of the year, of course, was inflation. What started on used car lots quickly bled into housing and commodities markets and virtually everything else. By June, U.S. mortgage rates were rising at a historic pace, the U.S. Consumer Price Index (CPI) was at a 40-year high, the Eurozone was hitting its highest inflation rate since the creation of the euro in 1999, and the UK inflation rate was the highest since 1997, when the National Statistics series began tracking CPI in its current format.Accordingly, central banks around the world responded with swift changes in monetary policy, moving quickly from the record low interest rates of the pandemic era to a steady march of rate increases at the most rapid pace since the 1980s. The far-reaching impact of these moves has been impossible to miss in our rates markets, where yields on the 10-year U.S. Treasury and German Bund each climbed more than 250bps between January and October of this year. On the longer end of the curve, the 30-year U.S. Treasury b...