Grey Swans Are Circling Markets Ripe for a Pivot
The pace of rate hikes has become as potent in threatening global financial stability as inflation. There are already emerging signs of trouble around the world. This is adding to the reasons markets are starting to look for the Federal Reserve to ease off the brake. For now though, the Fed is still looking inward where the risks are more tilted toward a recession than a financial crisis.
It looks like central banks have heard the message. Markets have had considerable stress recently. It was most acute in the UK government bond market and continued with European banks, like Swiss giant Credit Suisse, showing signs of vulnerability. These cracks appear as some central banks are starting to slow the pace of rate hikes, buoying both stock and bond markets.