Investors faced many challenges in 2023 including elevated inflation, interest rate hikes, geopolitical conflicts, and a slowing global economy. Those who were patient and rode out the volatility were rewarded. After several years of challenging returns, equity and bond prices rose amid signs of a slowing global economy and the possibility that central banks will begin to cut interest rates in 2024.

he markets have been volatile recently because inflation has not declined as expected, and interest rates remain high. Investors had thought central banks would have started discussing interest rate cuts by now, but that has yet to happen.

Since the beginning of the year, Canadian and U.S. economic data has pointed to stubborn inflation resulting in market pricing in more interest rate hikes than expected.