Stocks and bonds globally have been hit hard in the past month by fears about when U.S. monetary stimulus will end and remain at risk of further heavy pummeling even if the Federal Reserve sheds light this week on the outlook for its policies, some analysts say.
The Fed concludes a two-day meeting on Wednesday and is expected to calm market jitters about when it will start to unwind its $85 billion worth of monthly bond purchases to aid a recovery in the U.S. economy.
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Still, markets remain at risk of a heavy sell-off because the mentality driving trade has changed compared with just a few months ago, says Laura Fitzsimmons, vice president for futures and options at JPMorgan Investment Bank.
"It [a significant downturn in bonds and stocks] is something that investors are worried about," she told CNBC Asia's "Squawk Box."
"In May, we saw these correlations break down, especially the bond, equity correlation that had been strongly in inverse in the risk-on, risk-off period. Now markets have moved out of that period and it is more about liquidity and the removal of central bank stimulus," she added.
The yield on the benchmark 10-year U.S. Treasury yield has risen more than 50 basis points since early May, while U.S. stocks are down a modest 2 percent from their May peaks.
In fact, markets globally have been rattled by the prospect of the Fed taking back its stimulus – emerging markets have suffered heavy losses, while stocks in Asia and Europe are well off the peaks hit in May.
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"There could be a chance of a tail event that bond and equity prices plummet. At this stage, it's not our base-case scenario, but it is something we are pointing out as a risk," Fitzsimmons said, adding that she would not rule out a further 5 to 10 percent retracement in stocks, with U.S. and Japanese shares especially vulnerable.