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Markets had a relatively muted week, despite problems in the American banking sector and central bankers raising rates.

An inversion of results during the last week of April: bonds up, stocks down. This behavior seems to be associated with a revision of growth prospects, as evidenced by the outperformance – a rare occurrence in the last two years – of nominal bonds over inflation linkers.

Global equities continue their march higher, though with some notable regional exceptions: emerging markets are still under pressure, returning -1.6% during the week in Euro terms.

While markets continue their recovery and behave mainly in a normal way, there is something somewhat suspicious lurking under the surface.

A relatively muted and shortened session, with equities under pressure and bonds holding their own.

This may sound like a bit of a rant. But it isn’t: it’s very good advice.
When I speak to non-professional investors about the issues they usually face I often say that the current state of affairs is in part the result of their own demands

I am comforted by noticing that at least one group of public servants are doing exactly what they are supposed to do: governing; running things. That is what three central bankers have done over the past couple of weeks. We may argue if they did the right or wrong thing. But they did their job.

Implied inflationary expectations fell last week, as evidenced by the performance differential between nominal bonds [+2.7%] and inflation linkers [+0.8%].

The problem with bank failures is that no one knows where the knots are and who or what will come next. Like an outbreak of Ebola, you know the virus is there but you don’t know where it will pop up.