The yuan and a range of risk-sensitive asset classes could confront a bearish situation if China’s economic rebound continues to stutter along and no substantive support measures are implemented. Weakening domestic growth momentum – at a point when other major economies are facing recession risks – could dampen global growth forecasts and create a negative feedback loop.

If global inflation fails to meaningfully slow, forcing developed-economy central banks to tighten monetary conditions even further, growth projections might fall as interest rate expectations move higher. This could weigh on China’s export outlook and push the dollar higher than expected.