With expectations of a possible more aggressive monetary policy from major central banks in the coming months, most international stock markets and government bond markets came under fresh pressure last week, further tightening global financial conditions and heightening concerns about the impact on the global economy.

UK markets have been in the spotlight for investors as the government’s announcement of a massive £45bn (2% of GDP) tax relief package, the largest in 50 years, raised concerns about the country’s financial stability. Government bond yields hit a multi-year high and the pound sterling fell to a historic low against the dollar, the UK’s central bank said. (BoE) to announce an emergency quantitative easing program to restore the normal functioning of the markets. The decision comes as the bank has already entered a rate hike cycle and is gearing up for a quantitative tightening program at the end of October, with the chief economist signaling markets for a significant rate hike at the next meeting, and the market is now awaiting a final decision. around 6.00% at the beginning of 2023 for the key intervention rate, compared to the current level of 2.25%.

The pressure on UK government bonds also affected US and Eurozone stocks, which were also affected to some extent by endogenous factors. Typically in the US, the large amount of data was a pleasant surprise, reinforcing the assessment that the economy is showing some degree of resilience to the overall 300bp growth. interest rates since March, leaving room for further Fed hikes to ensure price stability conditions over the medium term. In the meantime, eurozone inflation continues to rise, with the consumer price index hitting a new all-time high of 10.0% year-on-year in September and the market discounting another 75bp gain. at the next ECB meeting in October.

* Department of Financial Analysis and Research of International Capital Markets of Eurobank.