Investment markets have continued to struggle. Year to date, global and domestic bonds, and global and domestic equities, have all gone backward. Returns from cash in the bank are slowly improving, global listed infrastructure has been a rare example of capital preservation. And investors have suffered portfolio losses.

The global economic outlook has become more difficult. Inflation has proved to be a bigger problem than expected, and financial markets are now more concerned that central banks, in their efforts to bring inflation down, may raise interest rates to the point where they choke off the post-coronavirus cyclical recovery of the global economy (excluding China, where lockdowns have been slowing its economy).

Markets have been roiled by a series of unpleasant shocks—most recently by the Russian invasion of Ukraine, on top of a pre-existing spike in inflation, the ongoing global evolution of the coronavirus, the outbreak of omicron in New Zealand and the subsequent consumer-inhibiting surge in cases, and the prospect of central banks unwinding the ultra-easy monetary policies that had helped sustain asset performance (other than the returns from cash) in previous years.

Both bonds and equities have lost ground for the year to date. Bonds have weakened in a world of unexpectedly high inflation, which has prompted central banks to start raising interest rates.