The inevitable correction in financial markets

From early October 2023 to the end of 2023, bond markets experienced a sharp fall in long-term interest rates, caused by expectations of early central bank interest rate cuts and rapid disinflation. This fall in long-term interest rates triggered a sharp rise in equity markets from October 2023 to the end of December 2023. It is inevitable that this trend in financial markets in the fourth quarter of 2023 will now correct and reverse, especially in the euro zone , because: Central banks are much more cautious when it comes to deciding on rate cuts than financial markets expected at the end of 2023; Inflation in the euro zone will be higher than generally expected, due to the disappearance of base effects on commodity prices, not just energy prices, and due to continued strong wage increases and stagnating productivity. 10-year government bond yield s could rise to 4.50% in the United States and to 2.70% in Germany (3.30% for the euro zone as a whole), causing a major fall in stock market indices.