What a difference a quarter makes. When I last wrote in January, we remained cautiously risk on, but extremely nervous in the process. As I noted at the time, we saw risks that a change in the inflation outlook could "cascade throughout the system to affect policy, yields and the complacency that envelops all asset classes."
Since then, that complacency has been sorely tested, as firm US inflation readings prompted a steepening of the expected path for the policy rate and a rise in long-term interest rates. But an evolving policy rate outlook has been just one catalyst for the uptick in market volatility.
Investors have also grown increasingly concerned over the Trump administration's "America First" trade agenda, as well as a potentially less favourable regulatory environment for the US technology sector after a handful of high-profile events shook investor confidence in a couple of leading tech firms.
Some cracks in the narrative of synchronised global growth have further added to the wall of worry in markets. Given these factors, it is unsurprising that investors have demanded additional compensation for holding risky assets.