Many asset prices have traded sideways since the release of the previous BIS Quarterly Review in early December, while investors waited for clues on a number of sources of uncertainty. Market participants expected a change in the policy mix in the United States, with a greater role for fiscal policy, continued gradual tightening of monetary policy, a push for deregulation, and a more protectionist trade stance. However, the precise nature and timing of policy changes and their impact remained unclear. In February, stock markets rallied in the United States, while sovereign yields in a number of euro area countries came under pressure as investors shifted their focus towards political uncertainties in Europe. More broadly, asset returns have become less correlated across classes, regions and sectors. The close co-movements that characterised markets during much of the period following the Great Financial Crisis (GFC) seem to have broken down. This suggests that, over the period under review, swings in investor risk appetite were less of a driver of overall valuations. […]