A look at the day ahead in markets from Julien Ponthus.
Investment banks such as Goldman Sachs (NYSE:GS) and Citi have been keeping busy this week, updating their models, highlighting heightened risks of a U.S. recession and fuelling further nervousness across global markets in the process.
And while Fed Chair Jerome Powell acknowledged the risk that monetary tightening could lead to economic contraction, Europeans have been hit by a combo of recession warnings of their own.
Thursday's data showed slowing business activity across the continent, just as Germany triggered the "alarm stage" of its emergency gas plan in response to falling Russian supply.
It didn't take long for markets to decide which way to move. Bond yields across the euro zone fell, taking little notice of Norway's central bank delivering its largest single interest rate increase since 2002.
The economic implications of Russia cutting off gas to Europe to bolster political leverage, a possibility raised by the head of the International Energy Agency, triggered heavy selling in the euro and Germany's DAX stocks benchmark.
Still, the fall in oil and commodity prices is offering hope: Brent crude is down 10% in June and set to snap a six-month streak of gains.
That suggests peak inflation may not be too far off and is driving better sentiment towards equities, with the global benchmark set for its first weekly gain in June.
All in all though, the first half of 2022 is still shaping up as one of the worst ever for financial markets. And if angst about higher interest rates starts to fade, markets may turn their focus towards downgrades to companies' future earnings.
Key developments that should provide more direction to markets on Friday:
-Japan's inflation tops BOJ target for 2nd month in test of monetary stance
-UK retail sales fall by 0.5% in May
-UK consumer gloom hits record as economic misery mounts
-German IFO
-US building permits/University of Michigan survey/inflation expectations/new home sales
-ECB bank supervisor Edouard Fernandez-Bollo, Bank of Spain Governor Pablo Hernández de Cos, Governor of the Reserve Bank of Australia speaks at UBS event in Zurich
GRAPHIC: Russian gas flows to Europe slow (https://graphics.reuters.com/UKRAINE-CRISIS/lbvgnxjzepq/chart.png)