LONDON, (Reuters) – The macroeconomic situation is rapidly deteriorating and could lead to the U.S. economic downturn as the Federal Reserve increases its monetary policy in an effort to control inflation.

BofA chief investment strategist Michael Hartnett said that inflation shock is getting worse, rates shock just beginning and recession shock are coming. Hartnett also suggested to clients that stocks could not outperform cash, volatility or commodities in such a context.

On Wednesday, the Federal Reserve indicated that it would likely begin culling assets of its $9 trillion balance at its meeting in May. This will be at almost twice the rate it did during its last “quantitative tightening.” It is facing inflation at an all-time high for four decades.

A majority of investors expect that the central bank will raise its key rate by 50 basis points.

BofA reported that emerging market equity funds saw the largest weekly inflows of $5.3 billion over the 10 weeks to Wednesday, while emerging market credit vehicles received $2.2 billion. This week was their highest since September.

There were eight weeks of outflows in Europe for equities, at $1.6billion. Meanwhile, U.S. stocks experienced their second week inflows with $1.5billion in the week that ended Wednesday.

This analysis was done using EPFR data.