Global Private Banking Investment Outlook Report Historically, equities and bonds become less correlated when the economic cycle slows. US economic momentum 65 Correlation between bonds and euities S 0.6 0.4 60 0.2 55 0 -0.2 ISM index50 -0.4 -0.6 45 -0.8 40 -1 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Source: Bloomberg, HSBC Global Private Banking as at 22 November 2022. Past performance is not a reliable indicator of future performance. The fall in valuations has pushed up bond yields and equities’ earnings yield, but the move in bonds is more significant. 14 Fed funds 5-yr US Treasury US Inesen rade 12 US euiies loal euiies 10 8 6 4 Bond yield and earnings yield (%) 2 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Source: Bloomberg, HSBC Global Private Banking as at 22 November 2022. Past performance is not a reliable indicator of future performance. Note: equities’ earnings yield is the inverse of the Price / Earnings ratio. 10