Julien Ponthus shows you a glimpse at tomorrow’s markets.

James Bullard, President of the St. Louis Fed, stated that the U.S. Federal Reserve was “not as far ahead the curve as one might think”.

Inflation running at more than 6%. The jury is out as to whether or not last week’s rate hike of 50 basis points is keeping up with the curve.

However, the U.S. terminal rate pricing remains at 3.5% by mid-2023. Only time will determine if the Fed’s bold plan to raise rates this year will cause the economy to enter recession.

In Britain, too, there are already recession fears due to the rapid pace of interest rate increases. The BoE has warned that an increase of 10% in inflation will cause severe economic problems.

The world has to deal with rising bond yields, and an increasing greenback.

As the global economic crisis in Ukraine and COVID-19 lockdowns continued to impact global growth, this morning’s dollar reached a new two-decade high.

Today’s data revealed that China’s growth in exports has been slowing to its lowest level for almost two decades.

This growth concern may discourage central banks in Japan and Europe from tightening policy to match the Fed.

Numerous currency strategists are already warning of the possibility of euro dropping below parity with dollar. Meanwhile, the yen has been trading at unheard levels in the past two decades.

Stock markets are also feeling the pinch as rising yields on ‘risk-free” government bonds reduces the attraction of risky assets.

Stocks in the United States suffered their fifth weekly loss last week. This is the worst performance since 2011.

About 25% of the Nasdaq’s peak was reached in November, when central bankers officially abandoned the narrative about ‘transitory Inflation’.

European stock markets will reopen cash trading this morning, after suffering four consecutive weeks of losses.

Fed funds and dollar https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwgeravo/FEd%20funds%20and%20dollar.JPG