Summer vibes across most markets, but will they last?

Since our last Financial Market Stress Monitor on 13th May, strains have continued to ease. This abbreviated Stress Monitor takes stock of developments since then. Overall, stress across core financial markets appears about as low as at any point since the Russian invasion of Ukraine started in early 2022, and risk premia have moderated over recent months on growing hopes of a “soft landing” in the US. While we expect a deterioration in risk sentiment as the global economy slows further over coming months, the danger of a wider breakdown in market function appears less acute.