top of page

Monthly market update - November 2022


Growth assets continued to rally in November on optimism that inflation has peaked in the US and that the US Federal Reserve (the Fed) would slow its interest rate increases. The US dollar and bond yields have retreated over the past two months, which is supportive of growth assets.

The US mid-term elections turned into a tighter race than expected with no ‘red wave’ appearing for the Republicans. The Republicans gained the House, but the Democrats held the Senate. We expect another ‘showdown’ over the US$31.4 trillion debt limit, which is due to expire in 2023. The US budget deficit is running at US$1.5-2.0 trillion per annum and the US public debt will eclipse US$31 trillion in 2023 (debt/GDP ratio of 137%).

The G20 meeting in Bali demonstrated improved dialogue between China and the US and Australia. While nothing concrete came out of the meeting, it was pleasing to see diplomatic channels opening up again. China retained its hard lockdown policy on COVID until recent weeks, where it has acknowledged citizen protests and started to open up the economy. China reopening and the lower USD has generally supported commodity prices, but we note that Brent oil continues to drift lower. The West has implemented a US$60/bbl price cap on Russian oil, but we suspect that oil is drifting lower due to concerns over global recession ahead.


Inflation may also have peaked in Australia, which has raised hopes that the economy may skirt recession. The RBA has lowered its rate increases to 0.25% and is currently at 3.10%, with the market expecting a peak cash rate of 3.60% by June 2023.

As mentioned above, commodity prices have generally rallied in recent weeks, while the AUDUSD has also recovered, mainly due to weakness in the USD. Bank and Resource stocks have led the rally in the local market, with Banks perceived beneficiaries of higher interest rates, while Resources benefit from higher commodity prices.

While the oil price has started to retreat, coal and gas prices remain high in Australia and the Labor government has moved to implement price caps on coal and gas prices in Australia for a period of one year. This won’t really reduce energy prices but will stop them from going even higher in 2023.


We view this rally in growth assets as a ‘relief rally’ on the hopes of peak inflation and Central Banks tapering their interest rate increases. However, interest rates are still rising, and the previous rate increases are yet to fully impact the economy and are not likely to be felt until 2023.

Accordingly, we remain cautious and expect the next events to include a major slowdown in the economy and earnings downgrades. Inflation should eventually retreat but in the meantime, we will be dealing with very challenging conditions for companies. We think it is too early to be talking about Central Banks’ ‘pivoting’ - that is a reversal in their tightening policy. This will come but is not likely until late 2023 or 2024.

We expect markets to remain volatile for most of 2023, but this will present opportunities ahead of the next bull market (as interest rates come down). We are positioned defensively and will be on the lookout for such opportunities as they arise.

The next key events on the calendar include:

  • Fed meeting – 13/14 December 2022

  • RBA meeting – 7 February 2023

  • Australian 1H23 reporting season – February 2023

Bill Keenan

Principal, Portfolio Manager

Bill Keenan is the founder of Sunbird Portfolios. Sunbird provides independent advice to leading financial advisers across Australia.

Bill has 28 years’ experience in financial markets and holds a Bachelor of Business in Accounting and a Graduate Diploma in Finance and Investment.


General Securities Advice - any advice provided in this document, is general in nature only and does not take into consideration an investor’s objectives, financial situation or needs. Before acting on the advice, the reader must consider whether it is personally appropriate considering his or her financial circumstances or should seek independent financial advice on its appropriateness.

Past performance is not a reliable indicator of future performance.

13 views0 comments

Recent Posts

See All


bottom of page