Risk appetite proved resilient during most of the review period, but a wake-up call from renewed Covid-19 concerns curtailed the gains in late November. Before the news of a new and threatening virus strain emerged, equity indices had risen strongly in many advanced economies (AEs). Corporate credit spreads in AEs had remained compressed, with issuance close to past records, indicating that financial conditions were still exceptionally accommodative. Government bond yields had increased, particularly sharply at the short end, as investors wrestled with fluid prospects of increased inflation and a removal of monetary accommodation. Government bond yields had also risen in emerging market economies (EMEs), as the fall in their currencies’ value against a broadly appreciating US dollar revealed concerns about their economic outlook. […]