2022 has been an unpredictable year for crypto and other assets. As 2023 begins, the macroeconomic landscape is uncertain. This article looks at the top three macroeconomic events that could shape the global economy and market in the upcoming year.
Examining The top three macroeconomic events that could influence the world economy and global markets in 2023
The start of the New Year has ushered in a period of uncertainty for the world economy. Last Year saw assets like stocks, precious metals and cryptocurrencies be affected by macroeconomic events that caused asset price volatility. Macroeconomics is the branch of economics that studies the behavior and consequences of the economy as a whole. Below is a list of three major events that could have an impact on global markets and world assets.
The Ukraine-Russia War
This macroeconomic event could have a significant impact on the world’s economy and global assets in 2023. Russian President Vladimir Putin delivered his New Year’s Eve Address to the nation, indicating that the war will continue at his discretion. Instead of his traditional appearance in front of the Kremlin, he was joined by a handful of others in military uniforms. The Speech suggests that Putin will disregard the West’s attempts to stop Russia with financial sanctions. As we saw in 2022, the ongoing war in Europe could cause an increase in energy prices and disruptions to supply chains, and have an effect on global markets.
Covid-19 in China
Crypto assets, stocks and precious metals have been dealing with the macroeconomic effects of Covid-19 for longer than three years. Multiple reports indicate that Covid-19 is wreaking havoc in China, and the government has stopped publishing Covid case count numbers. Global investors were concerned in 2022, and have moved to 2023 with an even greater sense of trepidation. Global trade is a major cause of concern, as certain supply chains have been halted for several years due to the pandemic. This has had an impact on cryptocurrency prices, as we saw with “Black Thursday” in March 2020 when Bitcoin (BTC) fell below the $4K mark after the World Health Organization declared the pandemic a global health emergency.
Central Bank – Federal Reserve Rate Hikes
After the eradication of benchmark bank rates during the Covid-19 pandemic and major stimulus injections of 2020, central banks such as the US Federal Reserve have raised benchmark interest rates substantially. Every time the Federal Reserve raises the rate, it causes huge fluctuations in precious metals, stocks and crypto markets. Interest rate rises refer to macroeconomic events that can influence the global interest rates for loans. For example, today’s fixed interest rate on a US mortgage for 30-years is 7.9%, which is significantly higher than the 3.815% fixed 30-year interest rate for a US mortgage in January 2022. A macroeconomic event that causes market fluctuations is the raising or decreasing of the federal funds rate.
Macroeconomic events can have a positive or negative impact on a stock, precious or crypto asset if they are expected or necessary to affect the security’s underlying foundation. These events may have an impact on global markets and world assets but they can also shake them to their core. 2023 could be no different, as 2022 clearly showed that macroeconomic events such as the war in Europe, Covid-19, and central banks rate hikes have moved all the most popular markets around the globe, including fiat currencies, commodities and securities, as well as crypto assets.
What do you think of the three macroeconomic events which could potentially impact the cryptocurrency, stocks and precious metals markets in 2023? Let us know your thoughts on this topic by leaving comments below.
