By Clare MacCarthy

After one of the roughest weeks in years for equity markets there's just one question facing us this Monday – is it over yet? Unfortunately, as John J Hardy, Saxo's head of FX strategy explains, it's just too early to tell.

"I don't have an immediate answer for that but do note that US yields are pushing to new highs for the cycle," he says, pointing out that these elevated levels in bond yields haven't been seen in a generation (meaning 30 years) and that market participants are therefore not equipped to deal with these highs and their implications.

"The 3% level is really critical and if we find resistance there we may have the ingredients for a recovery," Hardy says. Meanwhile, there's little of interest in the economic calendar in the early part of this week, besides US inflation numbers on Wednesday. Even so, in an environment like this, participants are likely paying scant attention to any new numbers. "At a time like this, sentiment and animal spirits are more important," Hardy concludes.

US 10-year: Volatility will not return to old regime as long as yield continues rising.