Sujata Rao gives a look at what’s ahead for markets.

Australia is now the second. In a matter of one week, two central banks who had stated they didn’t see any need to raise rates until 2023 and 2024 were unable to eat humble pie.

Australia on Tuesday hiked rates by 25bp to 0.35%, a larger hike than markets had bet on and confirmed more to come in the months ahead. Inflation forecasts were also increased by two-fifths. This comes just a week after Sweden raised rates 25 bps, and will flag more in upcoming meetings.

Just goes to prove how surprising inflation is. China locking downs are still in place, so there might not be any relief for the supply chain issues that contributed to the price explosion.

An RBC report has found global port congestion is worsening, with marine insurance costs still rising and one-fifth of global container fleet is stuck in various ports. Ouch. 

Next up, the Federal Reserve meeting which starts later today and will concludes on Wednesday, almost certainly with a 50 basis point rate hike and an announcement that balance sheet reduction  will kick off next month.

Monday’s 10-year U.S. Treasury yields surpassed the 3% level for the first-time since 2018. 

Interestingly though, the yield jump was down to a 17 bps rise in real inflation adjusted yields and that took 10 year break-evens — a gauge of future inflation expectations —  below 3%. Could it be that markets are becoming convinced that an aggressive Fed will be able to tame inflation and inflation expectations? 

European equity markets have opened more firm in Europe today, and U.S. stock options are also higher. That was after a flash crash on Monday caused by a Citi trader’s fat finger.

Asia’s jittery traders sent this message Alibaba (NYSE:) shares and bonds plunging after a media report that authorities in Hangzhou had placed curbs on a person surnamed Ma. They recovered after it turned out not to be Alibaba’s Jack Ma.

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

S.Korea’s inflation reaches a 13-year high

– German unemployment April

– Euro zone PPI March (Feb 36.2%)

An emergency meeting of energy ministers in the European Union holds to discuss issues relating to the supply of electricity for the bloc.

ECB President Christine Lagarde, Norway Central Bank Governor Ida Wolden Bache speaking

Video conference by the EU Informal of Economy and Finance Ministers.

US job opportunities for JOLTS/durable goods/factory orders

– European earnings: BNP Paribas/Telenor/Deutsche Post/Uniper/BP/Osram/JD Sports/telecom Italia

– US Earnings: DuPont, (NYSE:)  Thomson Reuters (NYSE:), Pfizer (NYSE:), Estee Lauder (NYSE:), S&P Global (NYSE:), Lyft (NASDAQ:), Starbucks Herbalife (NYSE :), AIG (NYSE :), Prudential