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Markets haven't yet fully priced in the threat of a recession, which means that stocks will continue to plummet over the next few months, according to Société Générale's chief market strategist.

Albert Edwards said the Federal Reserve is now prioritizing curbing inflation above avoiding a "market meltdown", even though equities have struggled from a dramatic sell-off in 2022.

"Market meltdown looms," he said in a recent research note. "The Fed has, in an act of penance for allowing inflation to get out of control, donned a horse-hair shirt and is fully prepared to drive the US economy into a recession."

The Fed announced it would hike interest rates by 75 basis points last week. It's tightening monetary policy to try to tame inflation, which soared to a four-decade high of 8.6% in May.

However, the central bank's hawkishness has terrified investors, causing a bearish stock market. The S&P 500 has plummeted 12.8% since the Fed announced it would start raising rates on March 16.

"Market commentators are now determinedly saying that the recession will be shallow," he said. "That is a normal spurious landmark we pass at this stage in the cycle before all hell breaks loose and both the economy and markets collapse."

Commodity prices will also be drawn by the negative economic growth, Edwards said. Oil has slid over the past month, with Brent crude dipping 7.8% to $107 a barrel and WTI crude falling 10% to just under $105 a barrel.

"I still see commodity prices plunging," Edwards said. He noted that the asset class entered a bear market during the 2008 recession when the price of a barrel of WTI crude oil fell $133.88 to $39.09 in under a year.