Saikat Chatterjee’s perspective on the future.

This week was central bank talk. It marked a significant step forward for policymakers in their efforts to remove the pandemic-era global financial system stimulus. While the Fed announced an acceleration in policy tightening, Bank of England surprisedly raised interest rates. The European Central Bank slightly reduced their stimulus while Bank of Japan cut back on emergency pandemic funding.

The markets aren’t liking this one bit. After posting the largest weekly increase since February, a gauge measuring global stocks could post a loss this week. Meanwhile volatility gauges in asset markets are on the rise after falling steadily over recent days. This signals growing anxiety. U.S. Treasuries, the Swiss franc and other safe assets are highly in demand.

With a rising Omicron strain and UK daily coronavirus infection levels at their highest level since the pandemic started, as well as disappointment on the Biden Administration’s inability to approve a $1.75 billion spending plan prior to Christmas, investors can expect a volatile end to an otherwise busy week.

Unwinding is possible in many other areas. It is no surprise that investors are extremely long technology and stocks, betting on a gradual unwinding of policy. A BofA monthly survey revealed that most investors expected the Fed only to increase interest rates twice next year, according to a BofA report.

MSCI Inc.’s Asia-Pacific index is down for a fifth session in six outings, with Chinese tech stocks sliding more than 2%. U.S. and European equity futures are in the red after the Nasdaq 100 sank the most since September. Oil is also lower than usual for three consecutive days, falling below $47,000 as global central banks prioritise fighting high inflation.

The following are key developments which should give more direction to the markets Friday

Speaking at the central bank: Fed’s Waller, ECB’s Rehn

Three-week high in gold: Gold reached $1,800 per ounce

Russia central bank meeting