In Japan and Europe, the central banks are battling the markets, not merely price rises. The troubles of the three central banks mean investors should prepare for the sort of low-probability, high-threat risks that lead to extreme shifts in prices. When central banks unexpectedly go into full reverse, watch out. On Wednesday, Fed ChairmanJerome Powellwent even further, saying he wouldn’t “declare victory” over inflation until inflation has been falling for months. Even a small risk of Italy running into trouble justifies dumping its bonds, as higher yields become self-fulfilling.

Source: Wall Street Journal June 19, 2022 11:29 UTC