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The week in Global Markets
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A wide gap between projected and market-priced Fed hikes developed into stronger dollar demand and broader pressure on equities, emerging markets, commodities, and bonds. Conflicting inflation data kept the tightening outlook unsettled even as financial conditions tightened.
Korean volatility escalated from scrutiny of a $290 billion leveraged-ETF boom to an estimated $6 billion forced-selling event. Repeated circuit breakers and delayed single-stock options showed how leveraged products were distorting price discovery during the rout.
An AI-led rally's leverage and valuation risks turned into a global technology selloff, although stronger chip results briefly stabilized the sector. The BIS warning that disappointing returns could spread into growth, credit, and financial stability widened the concern beyond share prices.
ECB officials stressed inflation vigilance and further hikes, but markets later cut expected tightening to less than 25 basis points as oil prices fell and consumer inflation expectations eased. The reversal lowered European rate premiums even as upside inflation risks remained in official commentary.
Yen weakness and talks between Japanese and US finance officials raised intervention expectations. Japan’s proposed $2.3 trillion investment plan then revived concerns about JGB supply, while inflation and bond-sale headlines kept Japanese rates in focus.
Day’s Recap