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Canterbury Outsourced CIO: Third Quarter 2022 Commentary
October 25, 2022

Every quarter, Canterbury's Outsourced CIO committee shares their observations of the market that impact the management of our discretionary portfolios in the Canterbury Outsourced CIO Commentary.

For the third consecutive quarter, both stocks and bonds declined in tandem. The S&P 500 fell 5.3%, the 10-Year Treasury rose 85 basis points, and 2-Year Treasury yields rose 130 bp, resulting in the most inverted yield curve in several decades. The U.S. Dollar appreciated for the fifth straight quarter, increasing 7%. At the same time, crude oil and gold fell more than 20% and nearly 8% respectively.

Amidst the noise of dismal market returns lies the concern of whether the tightening of financial conditions, which are driven by expectations of a more aggressive global rate hike cycle, will lead to a recession. Should a recession occur, many are still unsure if it will be a mild one or a true “hard landing”. Despite short-term interest rates increasing by over 300 bp, a low unemployment rate of 3.8%, stable home prices, healthy income gains, and manageable debt servicing have prevented a recession so far. To date, credit spreads have not blown out, which often occurs heading into a recession. With high yield option-adjusted spreads at 5.5% at the end of September 2022, corporate fundamentals still reflect stability. Thus, even though we are experiencing an inverted yield curve, which is a harbinger of impending recession, it may be too soon to consider a recession to be a foregone conclusion.

Access the Canterbury Outsourced CIO: Third Quarter 2022 Commentary

Ms. Parekh is a member of the Board of Directors, a shareholder of Canterbury, and directs the Canterbury Outsourced CIO platform, which caters to institutions and private clients who wish to outsource day-to-day management of their portfolios to Canterbury. In that role, Ms. Parekh is the chair of the Canterbury Outsourced CIO Committee and a member of each of the firm’s five Manager Research Committees. She joined Canterbury in 1996 as the manager of analytics with responsibility for directing the firm’s account analysts and client services group. In that role, Ms. Parekh secured many of the asset allocation modeling and research software tools we use today. In 2001, she became the director of manager research, responsible for oversight of all manager, fund, and product research; maintenance of Canterbury’s proprietary research database; and chairing the Investment Manager Research Committee. Ms. Parekh graduated from the University of Hong Kong with a Bachelor of Arts in economics. She completed her Master of Business Administration at Shenandoah University.