## Evolution of spread levels since 2007
## DM credit spreads trade below pre-taper levels
## Uncertainty is however still quite high
Uncertainty about the market outlook is however still relatively high. The tense situation in countries like Ukraine, Venezuela, Turkey, the increased systemic and economic risk in China, the distortions in economic data due to adverse weather conditions (US) or seasonality (Chinese New Year) all make investors hesitant to which scenario to position for.
The result is a combination of a moderate risk-off stance – which is reflected by the decline in DM government bond yields – and tentative flows towards DM equity markets. As a category between government bonds and equities, DM credits are also sought after. EM bonds and equities on the other hand continue to face outflows (although EMD just had a week with inflow), as the region is obviously seen as the most risky place to be.