Saikat Chatterjee gives a look at what’s ahead for the markets.

After the Easter weekend, traders who are bleary-eyed will return to work with a brief but action-packed week.

First, they must deal with inflation-adjusted rising borrowing costs. Yields on U.S. 10-year inflation-linked bonds could turn positive within two years.

This milestone is significant. This milestone is important. Equity investors have been able to remain calm in face of rising Treasury yields.

However, some bond investors are looking forward to normal interest rates. This will cause concern for stock markets. It is especially true in Big Tech pockets where valuations can be partially dependent on lower rates.

Federal Reserve policymakers continue to be hawkish, with James Bullard, the St Louis Fed chief (a well-known hawk), stating that he does not foresee a 75 basis point rate increase.

The markets have responded by lifting the U.S. Dollar above 128 yen for the first-time in over 20 years. Futures are now pricing in more than 200 basis points of Fed rate increases by the end-2022. The greenback index is at new highs for two years.

The IMF’s Spring Meetings will begin in the evening. We care. There are two reasons. Two reasons.

It is hard to find comfort in the newsflow about Ukraine. Negotiations have turned sour, U.S.President Biden labeled Russia’s invasion a ‘genocide’ and Moscow has refocused its ground offensive in Ukraine’s two eastern provinces.

France has finally been placed in Europe’s spotlight, just before the weekend’s second round presidential election. Latest polls show that incumbent Emmanuel Macron is slightly ahead of Marine Le Pen in recent polls.

There are key developments which should give more direction to the markets Tuesday

Earnings: Accessor (EPA:), L’Oreal, Johnson& Johnson, Xerox (NASDAQ:), Halliburton (NYSE:), Lockheed Martin (NASDAQ:), Netflix (NASDAQ :). IBM (NYSE:)

Speaker corner at the central bank: SNB’s Thomas Jordan and Fed’s Charles Evans

IMF publishes World Economic Outlook