In search of a trigger to turn sentiment around

In another week of growth concerns, bad inflation data and escalation of the Ukraine conflict, the pressure on risky assets intensified. Global equities fell to a 13-month low, and global high yield to a 22-month low. Ten-year Treasury yields rose sharply, approaching 3%, which was last surpassed in November 2018. On Wednesday, the Fed looks set to hike by 50 bps, announce its balance-sheet reduction plans and commit to rapid policy normalization. Policy divergence with Japan and China, combined with a weaker global trade outlook, is likely to put further pressure on the yen and renminbi.