| Central bankers fear a high inflation regime is settling in. Xi says Covid Zero is here to stay. Hong Kong's billionaire factory is broken. Here's what you need to know today. Risks are mounting that the world is shifting to a regime of higher inflation, forcing central bankers to tear up their playbook of the last 20 years. That was a key message from Federal Reserve Chair Jerome Powell and his European counterparts on Wednesday as they debated how to tackle persistent price pressures and slower growth. Powell, however, vowed that rapid price increases won't become entrenched. The relaxation of China's travel quarantine rules this week buoyed markets with traders taking it as a sign it was the beginning of the end for the nation's Covid Zero policy. Not so fast. President Xi Jinping declared Covid Zero the most "economic and effective" policy for China during a symbolic visit to Wuhan on Wednesday, the central Chinese city where the virus first emerged in late 2019. China would rather endure some temporary impact on economic development than let the virus hurt people's safety and health, he said. Meanwhile, Xi Jinping is finally about to leave China after 893 days at home.  | The bond market on Wednesday shifted to price in a half-point rate cut in the Federal Reserve's benchmark rate at some point in 2023, as traders upped their bets on a US recession eventually halting the central bank's aggressive tightening campaign. Market activity around the likely peak in the Fed policy rate and how quickly cuts to the benchmark might follow has increased in recent weeks. The moves have come amid a deterioration in consumer sentiment and fear that the fallout from higher food and energy costs might spur an economic slump. Federal Reserve chair Jerome Powell however believes different. The economy is in "strong shape" and able to withstand tighter financial conditions, he said. NATO this week agreed to the biggest upgrade of its military presence in Europe since the end of the Cold War in response to Russia's invasion of Ukraine. Sweden and Finland are set to join the alliance, more than 300,000 troops have been put on high alert, and it's beefing up its European defenses with extra forces, enhanced air power and new equipment. In an ominous sign for the Asian region, NATO leaders also identified China's increasing military presence as a "challenge" for the first time, and highlighted Beijing's deepening partnership with Russia. Here's what that all means. Even with the ratcheting up of geopolitical tensions and China's hardline Covid stance, Asia is still among the top places to be as the pandemic limbers on. South Korea moved up into first place in the final iteration of the Bloomberg Covid Resilience Ranking, with the United Arab Emirates in second. All of the top performers are successfully executing a strategy that most of the world has largely settled into: accept the virus is here to stay, vaccinate the most vulnerable aggressivel, and try and resume economic and social activity like it's 2019. Get the full, final ranking here. As a miserable quarter for investors nears its end, the outlook for the coming months doesn't look a whole lot brighter. Federal Reserve Chair Jerome Powell is sticking to the need to hike interest rates to fight inflation, but concerns are intensifying that he and his peers are too optimistic in their confidence that economies can avoid recession. Volatility indexes show how pivotal the conundrum is for markets: How many hikes, how much pain will that inflict and are we going to end up with rate cuts next year? Currencies and bonds are showing a lot more fear than equities, as central bank actions remain center stage.  Given that backdrop, the relatively lower (though still-elevated) readings for the VIX index of US equity volatility could also be concerning. Stock investors may be anticipating that this year's grind lower will extend. That's understandable with JPMorgan's FX volatility index and the MOVE gauge of expected bond swings highlighting policy uncertainty that plagues the outlook for all investors. Garfield Reynolds is Chief Rates Correspondent for Bloomberg News in Asia, based in Sydney. | 
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