January 2022 turned out to be a turbulent month for financial markets. Without any further ado, let's jump right into the charts.

The big story from last month was rising interest rates. With short-term Treasury yields rising faster than long-term yields, the Yield Curve dropped.

Rising Yields led to falling Bond Prices, which declined along with Stocks. With the developments from last month, Nominal Yields closed part of the gap that opened up to the Copper/Gold Ratio.

With rising yields and falling (expected) inflation, Real Yields rose, which was negative for Gold prices.

During the Covid-19 Recession of 2020, US Debt to GDP reached its highest reading in history. As noted by Lyn Alden, last time we saw these levels the debt got inflated away. US inflation rose to 18.86% leading to a negative Real Yield of -18.03%.

Let's see how equity markets performed in this environment of rising yields. Growth Stocks declined faster than Value Stocks, leading the ratio lower. Likewise, the Nasdaq underperformed the overall market (as measured by the S&P 500). In contrast to these previous two examples, continuing the secular trend of the previous 10 years, Large-cap Stocks kept outperforming Small-cap Stocks. Looking at sectors, Energy Stocks outperformed the rest of the market.

Let's take a look at real estate. With rising home prices in the US, the Home Price/Income Ratio exceeded its peak from the Housing Bubble in 2005. However, the US income numbers are lagging behind, so in retrospect, the ratio might look different (if US income were to raise sharply along with Home Prices). In the UK, where the income numbers are not lagging behind, the ratio also exceeded its peak from 2007.

Adjusted for inflation, in the US and in the UK, Real House Prices exceeded their peak from the housing bubble.

Finally, looking at Crypto, Ether dropped faster than Bitcoin, leading the Ether/Bitcoin Ratio lower.

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