Marketmind: 1%, 2%, 3%.. By Reuters

2/2© Reuters. FILE PHOTO: The Federal Reserve building is seen before the Federal Reserve board is expected to signal plans to raise interest rates in March as it focuses on fighting inflation in Washington, U.S., January 26, 2022. REUTERS/Joshua Roberts2/2

A look at the day ahead in markets from Julien Ponthus.

The global monetary tightening cycle has crossed a symbolic milestone with yields on German, British and U.S. 10-year government debt topping 1%, 2% and 3% respectively, levels not seen in years.

This rising trend is seen accelerating further with a hawkish Federal Reserve expected to hike interest rates by another 2.5% in 2022, starting with 50 basis points today, the biggest hike in more than two decades.

The Bank of England is due tomorrow with markets pricing a fourth hike in a row, a first since 1997, as data showed UK shop prices are surging at their fastest rate in over a decade.

More investors are also putting their money on a European Central Bank lift-off in July despite the economic uncertainties fuelled by the war in Ukraine and the supply chain disruptions linked to COVID-19 lockdowns in China.

And as policy makers push forth on a policy tightening cycle, there is a growing risk of a policy mistake leading to a recession or to some kind of tantrum across markets.

Many investors blame the Nasdaq's downfall on fast-rising bond yields which typically boost the appeal of 'risk-free' government bond returns while denting the attraction of growth stocks and their faraway future cash flows.

The outperformance of London's FTSE 100 index and its value-heavy (read cheap) miners and oil majors is quite telling.

So far in 2022, UK blue chips are up 2.4% while the Nasdaq lost close to 20%. Even if one takes out the currency impact of the rising greenback, the London index still hold the upper hand with a drop limited to 5.6% year-to-date.

Graphic: FTSE vs Nasdaq: https://fingfx.thomsonreuters.com/gfx/mkt/gdpzyajnyvw/Pasted%20image%201651581433097.png

Key developments that should provide more direction to markets on Wednesday:

-RBNZ says New Zealand's financial system remains robust

-German exports fall more than expected in March

Euro zone retail sales

OPEC/non-OPEC meeting

-U.S. Federal Reserve's Federal Open Market Committee (FOMC) meeting and press conference  1800 GMT

-U.S. MBA mortgage applications/ADP payrolls/international trade/ISM non manufacturing PMI

-Brazil central bank meeting. Rates to rise 100 bps to 12.75%

-Volkswagen keeps outlook as global network offsets supply chain woes [nL5N2WW15J)

-Hugo Boss sticks to 2022 outlook despite COVID restrictions, Ukraine war

U.S. earnings: Office Depot (NASDAQ:ODP),  Marriott, Yum Brands, New York Times,  Uber (NYSE:UBER), eBay (NASDAQ:EBAY), Metlife (NYSE:MET)

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