On the whole, markets have so far shrugged off recent concerns over a double-dip in the UK and global economies. Equity prices have recovered sharply over the last couple of months, partly on encouraging news on corporate earnings, while sterling has strengthened against both the dollar and the euro. Meanwhile, further falls in bond yields can largely be explained by downward revisions to the expected pace of monetary tightening as well as the fading of fiscal fears. Nonetheless, worries about the recovery may well intensify over the coming months, particularly as the fiscal squeeze begins to bite.
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