Merian's Harris: Peak in rates will be 'surprisingly shallow'

Markets have been far more volatile this year than last, taking fright at trade wars, the Italian budget, and the rout of the Turkish lira, for example. Yet most of the volatility has been in equity markets, while corporate bonds have provided a relatively safe haven.

There is one overarching reason for increased market volatility: it is a reaction to the end of quantitative easing (QE), which lasted for years after the financial crisis of 2008, longer than anyone thought it would.  Now, that process is reversing. Central bank balance sheets, having bloated, are starting to contract. Normality is returning. Liquidity has reduced, the US dollar has strengthened, and much of the money thrown at equity markets is now being pulled out.  What aspect of QE will have the biggest impact on markets? Corporate bonds have been much less volatile than equit...