The bad news is that stock markets slipped again last week. The good news is that things could have been much worse, with a fairly modest move down despite the US Federal Reserve raising rates by 0.75%, its biggest hike in 30 years. The Fed is following through on tough talk over the past few weeks, and Chairman Powell made it clear, repeatedly, that the Fed won’t stop hiking until it sees a clear run of lower monthly inflation data. The 0.75% move had been widely leaked in what appeared to be a choreographed media strategy. Nevertheless, it did the job, and the US government bond market actually had a good week, hinting that perhaps the US central bank has regained some of its lost credibility.

The same was not true of British government bonds, which plunged after the Bank of England’s mere 0.25% rate rise, implying that it won’t be enough to stifle inflation. The sell-off may have been influenced by the bank’s own forecast for inflation, which now shows it peaking at slightly above 11% this year, following the next increase in the energy price cap in October. The outlook for the UK economy has dimmed in recent weeks, with Brexit risks and industrial unrest adding to the pain already inflicted by rampant inflation and higher taxes. The recent decline in the pound will also be inflationary due to the UK’s propensity to import goods. This combination of extreme political and economic chaos has historically been associated with sterling crises; indeed, one may already be playing out in slow motion.

The European Central Bank tried to calm bond markets by formulating a plan to combat the recent “fragmentation” in bond yields issued by different countries within the EU. The move followed a rise in Italy’s 10-year bond yield to above 4% for the first time since 2014. The announcement of an emergency meeting to discuss the plan, the run-up to the meeting, and the plan itself were accompanied by a blow-by-blow series of press releases, suggesting that it was as much about public relations as anything else.

The Swiss National Bank used shock tactics when it unexpectedly raised rates by 0.5%. The bank had previously been regarded as somewhat dovish in the face of rising inflation, and had been notable in recent years for its desire to avoid a strong currency. But all that went out the window as the Swiss franc enjoyed its biggest rally in years, strengthening by 3% against the US dollar in a single day.

The Japanese central bank simply bullied bond markets into submission, spending the equivalent of £66 billion in one week buying Japanese government bonds. With inflation at a mere 2.5%, Japan faces a very different situation to the rest of the world and the Bank of Japan is actually still seeking to encourage more inflation. This is despite a decline in the Japanese yen to a 24-year low against the US dollar as investors seek the higher yields on offer in US bonds. The Japanese central bank is effectively trying to stare markets down but, given the tsunami of rate rises around the world at the moment, one can’t help but think of King Canute ordering the tide not to come in.