Against all odds, 2023 concludes as a year to remember with equity and debt markets closing strongly in the last two months.

It began 2023 with a number of concerns including inflationary fears, sharp increases in interest rates, weak corporate reports and the Russia-Ukraine war, with the vast majority of analysts, for the first time in years, projecting negative returns for equity markets.

However, the unexpected soon happened with the S&P 500 racking up an 8.9% return by the end of January for its fifth best start to a year in history. And while 2023 will be remembered positively, the road was not easy and was marked by high volatility.

By March, some of the concerns began to materialize, as rising interest rates brought on the regional bank crisis that included the failure of Sillicon Valley Bank, Signature Bank and the bailout of First Republic by J.P. Morgan. Together, the three banks accumulated assets of more than $540 billion.

Later in the year, during the summer, the markets continued with a positive tone driven by the technology sector; in particular, there was enthusiasm for companies related to artificial intelligence. An example of this was NVIDIA, which increased 68.5% in value from May to July alone, becoming the seventh company to pass the trillion dollar mark in market capitalization.

September and October, on the other hand, were again characterized by high volatility. Signal changes by the Federal Reserve as well as better-than-expected economic data drove the U.S. 10-year bond to its highest level since 2007, above 5%, and returned uncertainty to the markets. In addition to the above, the complicated negotiations between Republicans and Democrats to avoid a possible U.S. government shutdown and workers' strikes at the major automakers also fueled such nervousness.

Finally, we will remember the end of the year as one of the best year-end closes in the history of financial markets. Driven by favorable data on both the inflation front, as well as a robust labor market but showing some signs of cooling, equity and fixed income markets ended with strong optimism and excellent results in anticipation of achieving the much-desired goal of a soft landing for the U.S. economy.

At Grupo Inversión we are very satisfied with the results obtained for our clients during the year, being that the volatility and signal changes mentioned above were correctly navigated, thus managing to outperform the main equity and debt indexes during the period.