2023 Second Quarter Commentary: Economic Recap & Market Summary

Despite rapidly tightening lending conditions, equity market performance during Q2 2023 remained surprisingly robust, possibly marking the end of the corporate earnings recession that began in late 2021. Conversely, Q2 performance across other asset classes, such as commodity markets, paints a far less rosy picture. Despite bond yields having seemingly recovered from the banking crisis in early March, inflation remains a concern for fixed-income assets. Such strong performance in equity markets was admittedly unexpected. While we recognized stocks had some positive momentum at the end of the last quarter, we did not fully anticipate the extent of the multiple expansion driven by artificial intelligence during this quarter.

Read our latest quarterly commentary to find out our perspectives on various asset and sub-asset classes, and additionally provide analysis on the direction we anticipate the economy and markets may take as we progress into the latter half of 2023.


  • During Q1, U.S. Real GDP remained positive but grew at a slowing pace of around 2%. This is in line with the U.S. economy’s projected long-term growth rate, and Q2 estimates show this trend continuing, driven primarily by services-related consumption. Meanwhile, manufacturing and industrial-focused sectors have slowed considerably.
  • While headline inflation has decreased from its peak in 2022, the availability of labor has been affected by supply-side shocks, leading to tight employment levels. As a result, wage inflation remains stubborn – around a nominal 5%, which is still far off the Fed’s target of 2% and indicates that rates will likely remain elevated.
  • In fixed income markets, despite an outperformance from the credit markets, bond yields across all maturities ticked up during Q2 from their March low. However, the close of Q2 marked one full year of yield curve inversion, which reached its lowest level since the 80s at the end of the quarter.
  • Regarding alternative investment performance, our hedge fund platform, credit and yield-focused managers delivered consistent returns throughout the quarter, as managed futures also delivered positive returns, recouping nearly all the losses from the March banking crisis. Discretionary global macro managers had a much more difficult time, as their defensive positioning prevented them from reaping the spoils of the risk-on-equity rally.
  • Our recommended approach for clients is to adopt a well-rounded and diversified portfolio that aligns with their long-term objectives. It is crucial to maintain this strategy even during challenging periods/and lagging periods, ensuring the ability to weather turbulent times while staying committed to our clients’ investment goals.

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