Market development – Q4 2023


2023 was a really good investment year. For global equity investors, the year was even extraordinarily good with decent two-digit returns. Also Danish bonds had a very good year, although they could not keep up with the global equities throughout the full 2023.

However, if we look at the fourth quarter in isolation, there is only little difference between the returns on bonds and the returns on equities. Both equities and bonds experienced tailwinds during the last months of the year. The expectation of lower interest rates in 2024 caused the 10-year American and German interest rates to fall more than 1 percentage point from the top at 5% and 3%, respectively, in October. For the equity markets, the high interest rates in October became an increasing cause for the concern whether this would push economic growth over the edge. Therefore, the equity market applauded the falling interest rates in the past few months of 2023. The reason for the sudden turn in the interest rate market must to a high degree be ascribed to the signals from the central banks that inflation has peaked and is under control, which may even make room for interest-rate cuts 2024.

Figure 1: Development of equities and bonds