Deutsche Bank interest rate strategists led by Dominic Konstam compare the story in 2013 to that in 2012 in a note to clients, writing (emphasis added):
In the end 2013 went broadly according to plan, presuming global policymakers indeed do operate with a plan in mind. Stellar returns in core market equities, led by Japan but including the European periphery, were balanced by nondescript mildly negative returns in the less risky asset classes.
Europe enjoyed relative currency stability while the yen (finally) meaningfully weakened. The only real casualty has been emerging markets on both the bond and equity sides. 2013 was a year when the more advanced economies made a stand! To some extent that was also payback for EM outperformance in 2012, particularly on the bond side. More importantly though it represented an important and meaningful reversal of the 2012 risk off trade that saw for example Spanish equities drop nearly 5 percent while German stocks rallied 30 percent. Gold and bonds soared. The results of 2013 were a necessary response to the stresses inherent in the results of 2012.
The charts below provide a comparison of cross-asset returns in 2013 (on the left) versus those in 2012 (on the right), illustrating the points made above.
