Market Commentary — June 20, 2022

After a relief rally on the Fed’s three-quarter percent (75 bps) interest rate increase, its most aggressive hike since 1994, stocks sold off on renewed recession fears. The S&P 500 Index suffered its worst weekly decline since March of 2020 and entered bear market territory, down 24% below its January peak.

Two other negative multiyear data points: 1) Every member of the S&P 500 was in negative territory at one point, something that hasn’t happened since at least 1996, and 2) the NYSE advance/decline ratio was the most negative it has been since 2007.

The aggressive rate action was spurred by last week’s higher-than-expected inflation print of 8.6%, but investors are concerned that the economy is less resilient to rate increases than the Fed is expecting. Already, the housing market seems to be cooling thanks to a surge in mortgage rates approaching 6%. Building permits fell 7% in May to their lowest level since last September, while housing starts sank 14.4%, the biggest drop since the onset of the pandemic.

Retail sales fell 0.3% in May, dragged down by a sharp decline in auto purchases also being impacted by higher interest rates. Finally, weekly jobless claims also came in higher than expected at 229,000 versus estimates for 210,000.

The U.S. is not the only country battling inflation and rising rates. Switzerland piled on with a surprise 50 bps increase in its borrowing costs, its first since 2007, and the Bank of England had its fifth rate hike in a row, raising rates by 25 bps. Only the Bank of Japan bucked the trend, sticking with its accommodative stance and sending the yen to a 2 year low against the U.S. dollar.

Memories of the eurozone crisis came flooding back this week, as the gap between Italian and safe-haven German government debt hit its highest level since 2014. The ECB could struggle to keep bond spreads under control while also tightening monetary policy.

Meanwhile, the crypto meltdown continues as Bitcoin dips below $20,000. The WSJ headline is The Crypto Party is Over. Last week laid off 5% of its workforce, and Coinbase laid off 18%. None of this bodes well for the prospects for a spot Bitcoin ETF approval. And for those familiar with the Netflix series “Inventing Anna”, she is getting into a “legit” business, launching a line of NFTs.

Hope everyone had a great Father’s Day/Juneteenth weekend. Here’s to less asset destruction and better market action ahead.

Jane Edmondson
CEO and Co-Founder

Share this Market Commentary


EQM Indexes LLC is a woman-owned firm dedicated to creating and supporting innovative indexes that track growth industries and emerging investment themes. Co-founded by Jane Edmondson, a former Institutional Portfolio Manager with more than 25 years in the investment industry.


The information provided on this page is for illustrative purposes only and is not intended to serve as investment advice. The information provided is as of particular time and subject to change at any time without notice.

It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments based on that index. EQM Indexes does not sponsor, endorse, sell, promote or manage any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. EQM Indexes Indices makes no assurance that investment products based on the Index will accurately track index performance or provide positive investment returns. EQM Indexes is not an investment advisor, and makes no representation regarding the advisability of investing in any such investment fund or other investment vehicle. A decision to invest in any such investment fund or other investment vehicle should not be made in reliance on any of the statements set forth in this article. Prospective investors are advised to make an investment in any such fund or other vehicle only after carefully considering the risks associated with investing in such funds, as detailed in an offering memorandum or similar document that is prepared by or on behalf of the issuer of the investment fund or other vehicle. Inclusion of a security within an index is not a recommendation by EQM Indexes to buy, sell, or hold such security, nor is it considered to be investment advice.