Asset class correlations hit 2022 bear market highs as markets diverge sharply. US inflation accelerated to 3.4% headline and 3.9% core in February, with Middle East tensions poised to push prices higher. Morgan Stanley warns private credit default rates could reach 8%, matching peak GFC mortgage levels. Chinese home prices fell 3.2% year-over-year in February, marking the steepest decline in eight months and extending a historic 44-month losing streak. Geopolitical tensions are reshaping energy markets as Asian nations activate coal capacity to offset LNG shortages, demonstrating greater flexibility than Europe faced in 2022. These converging pressures signal heightened economic uncertainty ahead.
