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Worst first half since 1970 for stocks, a recession is more likely and volatile cryptocurrencies.Second halfThe S&P 500 suffered its worst f [View in browser]( [Bloomberg]( Worst first half since 1970 for stocks, a recession is more likely and volatile cryptocurrencies. Second half The S&P 500 suffered its [worst first half]( since 1970. But its dismal performance is not an indication of what’s to come. That’s according to analysis by S&P Dow Jones Indices that says historically, there has been little to no correlation between the index’s performance in the first and second half of the year. But risk of a [renewed selloff](in equity markets is still high as investors are only pricing a mild recession, according to Goldman Sachs Group Inc. strategists. Both [stocks and bonds](were rocked by outflows this week as investors fear the global economy could contract amid runaway inflation and hawkish central banks. Recession, inflation A US recession is now looking [more likely]( than a soft landing, [according to]( JPMorgan Asset Management's chief investment officer Bob Michele, since high inflation expectations, when entrenched, can become "destructive." Meanwhile, [headline inflation]( in the euro area accelerated more than forecast in June from a year earlier to a fresh record, pressuring regional bond yields higher. Bit of volatility If the first half of the year was bad for stocks and bonds, it was a disaster for crypto investors. Bitcoin, the largest digital token, has lost more than [half its value this year](. Ethereum's losses are nearer 70%. The first session of the new quarter has been volatile, with Bitcoin rallying [as much as 11.3%]( in Asia before giving up most of those gains to trade below $20,000. The problems in the crypto space can be seen in lenders like BlockFi Inc., which has been affected by a liquidity crunch, and the [troubles at Three Arrows Capital](. Industry giant FTX is looking to [acquire BlockFi for about $25 million](, a huge discount to the company's $3 billion valuation only 15 months ago. Stocks recover Stocks recovered after a [weak start]( with Euro Stoxx 50 rising 0.2% as of 5:20 a.m. New York time, having dropped as much as 1.4% in early trade. S&P futures were down 0.2% but off Asia's worst levels. European bonds traded poorly, fading from the week's highs, with long-dated German bonds particularly heavy. Treasuries pushed higher with the short-end outperforming. The dollar caught a modest bid, rallying against most FX majors. Crude futures rose over 1.5%, spot gold dropped about $11 to near $1,795/oz. Base metals were under pressure with LME copper trading below $8,000 a ton for the first time since February 2021. Bitcoin halved gains to trade back below $20,000. Coming up... We round off the week with the final June release of S&P Global's Manufacturing PMI at 9:45 a.m. June ISM Manufacturing and May's Construction Spending will follow at 10 a.m. The Baker Hughes Rig Count is due at 1 p.m. There are no Fed speakers scheduled, but we’re expected to hear from the ECB's Fabio Panetta and Pablo Hernandez de Cos throughout the session. What we've been reading Here's what caught our eye over the last 24 hours. - US will face [high gas prices]( ‘as long as it takes.’ - Trump’s [2024 prospects]( dented, GOP’s Toomey says. - [Russian missiles]( target Odesa. - [SpaceX]( can serve planes, cars with broadband. - How Europe became epicenter for [travel chaos.]( - [RadioShack’](s new crypto strategy. - U.C.L.A., U.S.C. poised to join [Big Ten.]( And finally, here’s what Garfield's interested in this morning This was the week when bond investors piled back in as expectations grew ever stronger that central bankers will hike interest rates fast enough and high enough to cool inflation. And that they will cause recessions in the US and elsewhere in the process. Treasury 10-year yields that came within a whisker of topping 3.5% in mid-June for the first time in 11 years [dropped back]( under 3% by Thursday. The zeitgeist was [captured]( by Bob Michele, JPMorgan Asset Management’s chief investment officer, who said the outlook now is worse than it was when he kicked off his Wall Street career during the stagflation crisis of the early 1980s. The backdrop to all this was a clarion call from the major central banks that, outside Japan, large and rapid rate hikes will keep coming. Federal Reserve Chair Jerome Powell, meeting in Sintra, Portugal with his international peers, led a [requiem]( for the era of low inflation. The bond market moved rapidly to price in an end to hiking cycles, with the Fed now seen [cutting rates]( by half a point over the second half of next year. And even as policy makers fretted inflation is here to stay, markets started betting that the “Great Inflation Trade of 2022” was [done and dusted.]( Garfield Reynolds is Chief Rates Correspondent for Bloomberg News in Asia, based in Sydney. Follow Us Like getting this newsletter? 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