Well, it’s Tuesday and the screens are red.

Asia took its cues from Wall Street’s less-than-enthusiastic start to the week and it looks like the bond rout jitters are starting to hit sentiment globally. “An acceleration in the selloff of global bond markets appears to be starting to let some of the air out of the recent rally in global equity markets,” CMC Markets’ Michael Hewson writes in a new note before adding that “it would be the ultimate irony at a time when economic data still remains fairly upbeat that concerns about rising inflation could be the catalyst to prompt not only an economic slowdown but also further stock market declines.”

Well, yes. But then again, the market has always known this. We’ve spent the better part of a decade trying to engineer inflation, but the problem is that the policies we’ve employed in the service of that goal will be rolled back if “victory” is ever achieved.  Because those policies have served to underpin the rally in risk assets, it stands to reason that in the final analysis, no one really wants to declare victory over inflation if that means calling an end to the stimulus that’s underwriting the rally.

“For the last 2-3 years, for the most part, risk premia (and volatility) have been declining as BKE’s widened [and] this is an overhang of years of fear related to the underlying economic slowdown in disinflationary environment,” Deutsche Bank’s Aleksandar Kocic wrote last week. “A gradual departure from zero or negative inflation, in that context was a metric for benchmarking the robustness of the economic recovery [as] BKE’s continue to be taken as a measure of economic health and wellbeing,” he added before warning that “this is likely to change if rates continue to rise.” Dashed lines below are stylized trajectories to illustrate a change in the dynamic (and note the right scale is inverted):