Weekly Commentary: Sour Fed growth view not dour enough

Many central banks aren’t acknowledging the extent of recession needed to rapidly reduce inflation. Markets haven’t priced that so we shun most stocks. Yields surged after more rate hikes and the UK’s fiscal splurge news. We cut UK gilts to underweight as we see higher rates and fiscal credibility questions. U.S. and euro area inflation is likely to show persistence in data this week. We think central banks underestimate the cost of bringing it down to target quickly.