February proved disappointing for markets, as stronger economic data crushed expectations of falling inflation and an early pivot in interest rates. Central bank rhetoric has become more hawkish and higher terminal interest rates are now forecast.

Tensions between the US and China rose after the US shot down a balloon, which it alleged that China was using for the purposes of espionage. The US also warned China against supplying Russia with weapons, saying it could risk escalating the war in Ukraine.

Markets have rebounded in 2023, as deeper recession fears fast became a thing of the past. Hopes are growing for a softer economic landing, despite persistently hawkish central bank rhetoric.