In last week’s article, I documented the weak start to the year for the US equity market with the S&P 500 index declining by 5.3 per cent after first dropping into ‘correction’ territory and then recovering during the last two days of January. The sovereign bond markets in the US, UK and the eurozone also performed poorly since the start of the year as it became clearer that the major central banks will be tightening monetary policy following the spike in inflation. As a result, bond yields rallied to their highest levels in many years. The Federal Reserve indicated its intent to raise interest rates next month following a rapid rise in inflation to 7.5 per cent in January, which was the strongest reading since February 1982. The chairman of the Federal Reserve recently also refused to rule out an aggressive sequence of increases to follow the initial rate hike in March. Markets are now expecting five interest rate hikes of 0.25 per cent each during the course of 2022, with some economists also suggesting up to seven or even eight rate hikes to combat the prevailing stubbornly high inflation. Across the eurozone, the major movement in yields took place on February 3 when during...