ANZ Research discusses the current market conditions and sees a scope for rising volatility in assets markets over the coming weeks.
"While equity markets momentarily suspended the down trend this week, under the surface it was much more about the rally in bond markets. The combination of hawkish policy and worsening weakness in economic data is extinguishing hope of a soft landing, and this is reflected in falling global yields. Weakening European PMIs–the Union’s and individual countries’–are challenging the Central Bank’s (ECB) thesis that the European Union’s economy is resilient enough to withstand rate hikes," ANZ notes.
"US new orders and retail sales are already fading in line with Federal Reserve objectives, but Chair Powell’s testimony signalled the Fed is just getting started with tightening. While a soft landing isn’t out of the question, coming US and EU price data are likely to show inflation continuing to rise unabated. Growing recession fears could well spark volatility in asset markets," ANZ adds.