2022 rate surge and the Luna collapse

The US policy rate went from 0% to over 4% in twelve months. Stocks, bonds, crypto and property fell at the same time.

Inflation

Pandemic stimulus, broken supply chains and the energy price spike after Russia invaded Ukraine in February 2022 pushed US inflation to its highest level in about 40 years. Central banks dropped the word "transitory" and started tightening.

Fast hikes, falling tech stocks

In 2022 the Fed raised rates in repeated "giant steps" of 0.75 percentage points, the fastest pace in decades. The policy rate went from effectively zero at the start of the year to the 4% range by the end. Higher rates lower the present value of every asset, and they hit hardest the tech stocks priced on profits far in the future. The Nasdaq fell more than 30% for the year. Bonds fell too, so the usual stock and bond split offered no protection that year.

Korea: the won at 1,440, home sales frozen

Korea followed. The KOSPI started the year near 3,000 and fell into the 2,100s in the fall. With the dollar strong, the won weakened to around 1,440 per dollar in October, its weakest in 13 years. The Bank of Korea matched the Fed with its first-ever "big step", a 0.5 percentage point hike.

Property took a heavy hit. Loan rates nearly doubled, buyers disappeared, and sellers would not cut asking prices, so transactions froze in a "trading cliff". Crypto fared worse. In May the Korean-founded stablecoin project Terra-Luna collapsed within days, erasing tens of trillions of won in market value. In November the major exchange FTX went bankrupt, and investors stopped trusting the whole crypto market.