Sujata Rao gives a glimpse at what lies ahead.

An additional central bank may allow for earlier interest rate rises than originally planned. Australia dropped its target of 0.1% for three-year debt, and it omitted projections for interest rates remaining unchanged at least until 2024. As markets continue to press the RBA for more liquidity, rates are expected to increase starting in May.

Markets already price multiple rate increases in 2019 due to rising inflation.

Stock markets aren’t overly perturbed, however. MSCI’s global Index is now back at record highs, almost two months ago. Wall Street has also reached new record heights.

Except for Monday’s 8.5% Tesla jump (NASDAQ:), the performance of so-called “value stocks” was better than expected, suggesting that perhaps recent bond market “curve flattening momentum is waning.” In fact, the spread between U.S. two-year and 10-year yields is now 10 basis points higher than on Thursday.

Many analysts including JPMorgan (NYSE) see the recent moves in bond and money markets as technical driven. They expect normalcy will return. To position yourself for longer-term yields, they recommend buying more cyclical stock to increase your chances of getting higher returns. Keep an eye out for this.

Inflation is rising almost everywhere. South Korean prices rose to an all-time high of 10 years, and have remained above target for seven consecutive months. The closely-watched ISM survey on Monday showed that high prices had slowed U.S. production in October. The survey also indicated some moderated demand.

Earnings season is what’s keeping stocks high. While CEOs might be complaining about rising costs, there is no indication that margins will be affected. According to Refinitiv IBES, the U.S. quarter-end earnings will have increased 39% compared with 29% in Q3, a change from what was originally predicted.

And then there’s M&A — $4.7 trillion in deals have been announced year-to-date, according to Refinitiv.

(For graphic on ISM – https://graphics.reuters.com/USA-STOCKS/jnvwewmdjvw/ISMPMI.png)

Markets should be more informed by key developments on Tuesday

The profit of StanChart Q3 doubles due to the decline in bad loans and boom in trade finance

BP plans to repurchase an additional $1.25Billion of shares before 2022. This follows a purchase of $900M in Q3

Moller-Maersk, a shipping group Moller-Maersk stated that record-high freight rates have boosted earnings in spite of lower container volumes because port congestion.

Earnings from the United States: Dupont and ThomsonReuters Estee Lauder (NYSE:) Pfizer (NYSE:),  ConocoPhilips, Ralph Lauren (NYSE:), T-Mobile, Mondelez (NASDAQ:), Western union, Prudential (NYSE:)