• A year ago, the Federal Reserve started hiking interest rates at its fastest pace in recent times.

• Its aggressive campaign has pushed up borrowing costs, fueling selloffs in stocks and bonds.

• Two of the highest-profile corporate collapses ever – FTX and SVB – have their roots in Fed rate hikes.

It's one year since the Federal Reserve started raising interest rates at the fastest pace in recent history — and what's followed has been a roisterous 12 months for markets and a couple of once-promising companies.

The US central bank has lifted borrowing costs from near-zero to just under 5%, starting with its initial raise on March 16, 2022. It's the fastest pace of tightening in decades, with policymakers making four outsized hikes in a row.

The Fed's aim was to crush soaring inflation — but it has claimed some high-profile scalps along the way.

Lender Silicon Valley Bank failed and FTX imploded after borrowing costs rose. Stocks and US Treasury bonds plummeted as the era of easy money came to an end, though the US dollar went on a historic tear.

Fed policymakers say they're not done yet, with inflation only just starting to cool down. Here's how their campaign has driven some of the biggest market moves of the past year.

Stocks

Between the early days of the COVID-19 pandemic and the end of 2021, US stocks went on a tear. Low borrowing costs and loose fiscal conditions helped drive up share prices.

But when interest rates rise, future cash flows fall for companies. That's because it becomes more expensive for them to borrow money.

So the Fed's year of rate increases has crushed equities.

The S&P 500 fell 18% between March and October last year. Although it's pared some of those losses, the benchmark US stock index is still down 12% from a year ago. Meanwhile, the tech-heavy Nasdaq Composite has crumbled 16% since the hikes started.

"Stocks had become reliant on low interest rates as a crutch," Dan Kemp, CIO at Morningstar Investment Management, told Insider.

"If valuations had been lower, then the reaction to the Fed's rate hikes would've been far less severe."

Bonds

It's been an even tougher year for fixed income investors. When interest rates rise, traders can find better returns by putting their cash in a savings account than by owning bonds, so prices tend to plunge.

Yields, which rise when prices fall, have soared over the past 12 months. Yields on 2-year US Treasury notes have added 209 basis points to over 4%, while yields on 10-year notes are up 130 points to just under 3.5%.

Meanwhile, Bloomberg's Global Bond Index — which tracks the price of fixed income investments across the world — fell into its first bear market in over three decades in September, after prices fell by over 20%.