European markets and US equity index futures stabilised after decline on Monday, futures for the S&P 500 bounced as expected after a failed breach of the 50-day SMA:

The rest of the markets also picked up the risk-on sentiment, currency markets pressed the dollar, EM is actively correcting upward, especially where there are expectations that rates will rise (ruble). Commodity currencies are growing along with commodity markets, WTI pushed up from $70 per barrel, however, there is no active growth. The sovereign debt markets of developed countries are seeing a slight outflow from long-range bonds after yesterday's gains.

So, there is indeed a rebound in the markets, but it looks very much like a technical one, since the key risks still remain unresolved. The situation with the Chinese mastodon Evergrande remains volatile, with no announcement from the Chinese authorities for a bailout over the weekend, so the risk of contamination of the wider real estate sector remains high and the flow of negative information on the topic is probably not exhausted.

Fed officials will begin a two-day meeting today to discuss whether the tightening of policies is appropriate in light of recent economic gains, which, by the way, are not impressive. Employment growth and consumer expectations eased in August, JP Morgan predicts another weak NFP in September, so risks are mounting that the tightening will be premature. At the same time, the Fed has less and less opportunity to take time, as there are more and more signs that the temporary rise in inflation is becoming more persistent.

With a combination of the course towards tightening monetary policy and the expectations of market participants that growth rates will slow down, the market is most strongly subject to correction.

The situation may be aggravated by the full-fledged hawkish position of the Fed (a hint of an earlier rate hike), which will be reflected in the updated dot plot. If more and more officials "move" to 2022 in terms of expectations when it is appropriate to make the first rate hike, then of course risk assets may dive deeper, especially in those sectors where assets have a high duration, therefore, the sensitivity to rate changes is greater than others.