Saikat Chatterjee gives a glimpse at what lies ahead.

This was the general tone of global markets Tuesday, as investors increased their bets that Omicron’s new variant might not be as fatal as they had feared. Global stocks are poised for the largest day-to-day rise in two months. The money markets have returned to pricing the U.S. interest rate hike before June 2022. Half of the losses the dollar suffered against the safe-haven Japanese currency since then.

Even policymakers remain optimistic. Australia’s central bank indicated the Omicron variant outbreak was unlikely to derail the current financial recovery while top U.S. infectious disease official Anthony Fauci told CNN, “it does not look like there’s a great degree of severity” so far.

Beijing released about $188 million in long-term liquidity, which was also good news. It reduced the cash banks had to keep in reserve Monday. This is Beijing’s second such move of this year. However, there are questions over China Evergrande Group’s future. Many bondholders representing the highly indebted developer of property said they were not able to receive coupons payments after the expiration of a grace period of 30 days on Monday New York.

Investors pushed European and U.S. stock futures higher, expecting the broader economic recovery won’t get derailed in 2022.

Expectations that global central banks won’t rush to tighten policy immediately propped up Chinese shares and boosted the Australian dollar. Indeed, JPMorgan’s strategists postponed their call for the first UK interest rate hike to February from December earlier despite robust labour market data. Market gauges of volatility also slipped back with both European and U.S. gauges well below last week’s highs.

The oil prices rose, consolidating the nearly 5% gain the previous day. Cryptocurrencies picked up where they left off after the weekend’s bruising.

Markets should be more informed by key developments on Tuesday

Central bank speakers: ECB’s Lagarde, Guindos, Schnabel

Germany ZEW survey

Eurozone revised Q3 GDP

U.S. trade balance

Chile inflation data (Graphic: Can central banks calm volatile markets?, https://fingfx.thomsonreuters.com/gfx/mkt/zgpomnbxapd/volatility0312.PNG)