Major equity markets show no sign of wanting to give up any of the gains made over the past months. The most international of the indices, the FTSE 100 - with some 75 percent of the revenues derived overseas, a third of which is from the developing world - provides a good example of how, by trading sideways, a market can work through its technically overbought condition without a sell-off. Meanwhile, the S&P 500 is moving onwards and upwards, encouraging other major equity markets, notably the eurozone, to keep up with it.

Might the shock to commodity prices reverse this? The risk is twofold. One is that headline inflation stays higher than expected for longer than expected, that this primes inflation expectations and ultimately feeds into the second round affects that push up core inflation. The other is the squeeze to real disposable incomes and spending, the growth of which is subject to restraint already from central bank tightening in the developing world and fiscal austerity in the developed world, importantly though, ex the US.

Judging by their action, the bond markets are focusing more on the former than the latter. In the UK and the eurozone, yields in the gilt and bund markets have been rising steadily and rapidly. Even in the US, where Mr Bernanke is doing all he can to tame the bond market vigilantes, yields in the Treasury market are on the rise again.

David Fuller's view Regarding the headline above, and so they should. Equities remain a much better investment than bonds, in the recovery and return to growth environment, as we have seen since 2Q 2009.