Following a prolonged period of unusual tranquillity, volatility in financial markets ticked upwards in early August. Risk appetite took a dent, as escalating geopolitical tensions added to renewed concerns about the recovery. Equity prices fell, especially in Europe, high-yield credit spreads widened significantly, and yields of safe haven assets such as short-maturity German bunds fell into negative territory. But markets quickly rode out the turbulence. By early September, they had already recovered their losses, as worries over geopolitical tensions gave way to investors’anticipation of further monetary stimulus in the euro area.[...]