A shock from geopolitics. Tensions involving Iran have pushed oil prices higher, feeding into inflation concerns. Markets initially reacted by sharply increasing expectations for interest rate hikes, before reversing course as growth fears re-emerged.

Different economies, different responses. Central banks are not aligned. The European Central Bank looks set to press ahead with rate hikes, while the Bank of England is becoming more cautious as the UK economy weakens. In Japan, rate expectations have actually fallen, reflecting a very different economic backdrop.

The US sits somewhere in the middle. The Fed is shifting towards a more neutral stance. A resilient labour market and strong investment - particularly linked to artificial intelligence - are keeping inflation pressures alive, even as policymakers remain open to different paths.

Inflation hasn’t spread (yet). The rise in prices still appears to be concentrated in energy. There is limited evidence so far that higher costs are feeding through into wages and broader inflation. Central banks are watching closely.

What about equities? Rising bond yields don’t automatically spell trouble for stock markets. What matters is why yields are rising. If they reflect strong growth, equities can hold up. If they signal an inflation shock, the outlook is more challenging. The pace of moves also matters. Gradual increases are easier for markets to absorb than sudden spikes.