U.S inflation is running red hot, with prices rising 8.6% from a year ago, marking the fastest increase since December 1981, while core inflation was up 6% year-over-year. The Fed will likely proceed with multiple rate hikes this year, and the tightening policy could continue into 2023, adding to the worries that the economy is nearing a recession. On the other hand, the World Bank has recently warned of a recession and slashed its global growth forecast for this year from 4.1% to 2.9%, amid the war in Ukraine, lockdowns in China, supply-chain disruptions, and risk of stagflation.
The market volatility is evident from the CBOE Volatility Index’s 90.1% year-to-date gains. However, the widespread sell-off has caused certain financially robust stocks to trade at a heavily discounted valuation.
