Extreme volatility was triggered after last Friday’s US May CPI print indicated broad and persistent inflation that catalyzed expectations that the US Federal Reserve and major central banks will turn more hawkish as headline inflation. Tighter financial conditions due to more aggressive rate hikes will act as a drag on the economy, increasing the risk of a recession at the margin, which further weighs on risk asset prices.
A more aggressive Fed rate hike trajectory would broadly lead to higher US Treasury yields and tighter financial conditions, while inversion of the US Treasury yield curve is widely read as a warning signal of rising recession risks. This is leading to widening of credit spreads, and equity downside triggered by corporate earnings downgrades and falling valuation multiples.
The Bank of Singapore CIO Office - Jean Chia, Chief Investment Officer, Mansoor Mohi-uddin, Chief Economist, Todd Schubert, Head of Fixed Income Research, and Eli Lee, Head of Investment Strategy will address investors’ concerns about volatility in the capital markets and implications for investment portfolios in this Market Watch Live webinar, including a question and answer session.
