The end of June concluded one of the worst starts of the year for markets ever. There were few places to hide with many major stock and bond indices down in the double-digits over the first six months of 2022. Notably, entering the year with historically elevated valuations paired with select areas of excess within the economy exacerbated the magnitude of year-to-date declines. The combination of sustained higher inflation and subsequent hawkish actions by global central banks has quickly reset investment asset valuations across the board while also increasing yields. These actions paired with recessionary fears, the enduring military conflict in Ukraine, and renewed coronavirus lockdowns in China were enough to push U.S. consumer sentiment to its lowest level ever. Although it’s easy to get caught up with the current headwinds for investors, markets are by nature forward-looking. More attractive starting valuations, higher yields, and lower expectations should contribute to considerably higher future returns for many investment asset classes relative to where we were only a few months ago. That said, with a potential recession looming, it could be a bumpy path to get there.

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