Yes, you can take out more hikes from ECB. Central banks were hiking due to inflation expectations, not to cause recession. As energy shock diminishes, risk of second-round effects comes down.

Economy today is not like 2022: inflation lower, labor markets looser, rates higher. Their concern is inflation expectations; likely they wait and see.

Possible, but we've seen the range market can price (like 3 ECB hikes worst case). If energy escalates again, yields could go up a touch, but we've seen the maximum before growth/demand destruction risks become elevated.

Credit spreads not pricing much growth risk; if crisis escalates, yields up a bit but not to prior extremes.

Critical question. Plugging in elevated oil prices, inflation shock is relatively small; uncertain is growth shock because economy more vulnerable than 2022. Central banks will err on side of caution, wait for data.

UK unemployment rising, BoE was probably going to cut in March before crisis; market still pricing 1.5 hikes this year – pricing bad scenarios where central banks focused only on inflation, not growth.

They sounded hawkish to anchor inflation expectations, but have since watered it down. Uniform message: won't let energy crisis morph into another inflation scare. Need to hike is much lower than in 2022.

Bond market also seeing large degrossing flows, thin liquidity, value coming in.

Contagion risk is about risk appetite/sentiment. Semi-liquid credit funds limiting outflows affects credit availability, can cascade to wider spreads. But no systemic crisis like 2007 – less leverage, more capital in system.

Widening more an opportunity to buy into higher risk premium because people are worried.