European bond markets sold off as stock markets bounced. Bundesbank President Nagel warned yesterday that central banks must not respond to higher inflation with “too little, too late” and that “if monetary policy falls behind the curve, even stronger hikes in interest rates could become necessary to get inflation under control” which would lead to higher economic costs. German Ifo business confidence numbers came in weaker than expected this morning, which together with the disappointing PMI reports yesterday added to recession fears, but for now stock market sentiment is looking a bit brighter.
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