The most important market event yesterday was a surge of longer-maturity Treasury yields, which apparently triggered greenback rally and sell-off in equity markets. The fact, that this happened after the Fed meeting suggests that the central bank’s efforts to control inflation proved unconvincing and investors decided to sell bonds, in other words, demanding more compensation for inflation in the yields. The slump in fixed-income markets saw similar response in equities with similar duration, primarily in the technology sector, where the share of growth stocks is high. Their cashflow is more stretched over time, which means that during the rise of market inflation expectations, their price should be hit harder. Such reasoning could be behind the collapse of the Nasdaq index by 5%. SPX and DOW erased just under 4% from their market cap.This is what it looked like on the chart:A new round of fears about inflation may happen today, after release of the NFP report. Among the details of the report, the markets are likely to be most concerned about wage growth, as it is the key pro-inflationary factor that has drawn focus of the Fed. Surprise on the upside in the reading may intensify bond market downslide and fuel additional greenback gains. MoM wage growth is expected at 0.4%. That being said, the market is likely to ignore weak Payrolls figure, as this fits nicely into the picture of a catastrophic labor shortage in the US, as we are told by the record number of open vacancies.The Bank of England raised key rate from 0.75% to 1%, details of the Meeting showed that the policymakers’ opinions were divided: 6 out of 9 voted for a 25 bp increase, the rest – by 50 bp. At the same time, 2 officials were in favor of stopping there. The Central Bank also warned that a recession could hit the economy at the end of the year, as the prolonged impact of high energy prices on the economy would lead to headline inflation rising to double digits before the end of the year. The real incomes of households, according to the BoE, are experiencing the largest shock in several decades. In addition to raising the rate, the Central Bank quickly began to prepare the markets for the sale of assets from the balance sheet in order to have room for easing credit conditions for the next recession. In the short term, of course, this is bad news for holders of UK bonds.The gloomy forecast of the Central Bank collapsed the pound, GBPUSD tested 1.23 and in the near future it will probably move towards the main support zone 1.20-1.21, from where a rebound can be expected:Other drivers of risk aversion include a rally in oil prices, as well as ongoing devaluation of the yuan, which is often China’s admission that the economy is in trouble. In just three weeks, the mainland yuan sank 5%:ECB officials are trying to ramp up hawkish rhetoric in what looks like an attempt to smooth the way for an early rate hike, possibly in summer. The euro tries to take clues from the comment, advancing against the USD, however, given that at least 90 bp is already priced in the EU money markets, it will likely be difficult for the policymakers to take aback investors. EURUSD pricing, therefore, may depend on the Fed tightening story as well as concerns of stagflation in EU and China economic predicaments. Risks for the Euro are clearly skewed towards further decline and in short term we are likely to see a breakout of 1.05 level in EURUSD with 1.0350 as key selling target. It should also be noted that the technical rebound from 1.05 EURUSD after the Fed looks close to completion which should facilitate selling attempts.