As markets keep running ahead of themselves to price in a recession, we believe inflation will still remain the key pain point in H2. While a short-term break in commodity super cycle may be warranted with markets pricing in demand destruction concerns, the structural supply issues still remain at play. US Treasuries started the second half on front foot, while the dollar gains returned.

The VIX Index and the VIX forward curve are not behaviouring as bad as the current selloff would suggest indicating unusual dynamics in the current drawdown.

South Korean equities are down 30% from its peak last year and have lost 12.5% during the past three weeks sending warning signals to investors that the world economy is losing pace fast.

The market is not buying the Federal Reserve nor the Bank of England's message. While the Federal Reserve is confident to tighten the economy aggressively in the US without causing a recession, the bond market says that a downturn might be inevitable. Despite a dovish monetary policy meeting in the UK, investors remain of the idea that the BOE will not be able to afford its dovish stance and that it will need to hike rates to 2% by the end of the year.