The global economy is being buffeted by two related shocks – a spike in inflation magnified by Russia’s invasion of Ukraine and a large increase in global bond yields sparked by the hawkish pivot by the Fed. There is a risk that we underestimate the size of these shocks, with the greatest concern linked to the potential for Russian energy supply to Europe to be shut off. In addition, there is concern that these two developments could interact and generate financial stress. To date, financial conditions are tightening as interest rates rise but there are no clear pressure points of stress raising unusual concerns.
Speakers:
Bruce Kasman
Michael Hanson
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