Monthly Market Musings: Hawks Take Flight

• Global rates surge higher following hawkish signals from central banks.
• The sell-off in bonds could continue until the inflation pulse turns lower. The current level of monetary stimulus remains extraordinarily accommodative.
• Developed rates markets are pricing front-loaded policy tightening, leading to flatter curves with the peak in rates below previous cycles.
• Risk assets have been rattled and elevated volatility could continue, even as the level of real yields and recession probabilities implied by yield curve models are benign by longer run standards.