Despite higher oil prices and warnings from the IMF that elevated bond yields threaten global growth through systemic risks, investor sentiment remains resilient, with only a modest retreat from aggressive risk-taking. Markets are assuming no major escalation in the Middle East before the US midterm elections, supported by President Trump’s comments that strikes on Iran will not resume beforehand and that negotiations are progressing. Early corporate earnings have also delivered mostly positive surprises, although attention will intensify as major technology companies report.Recent Fed commentary has pointed towards a more hawkish rate path, aligning with the expectation of a peak Fed Funds rate of 4.50%. This has helped temper bond yields and support sentiment, but the latest US CPI release remains the key test for how much further tightening may be required. Investors are therefore likely to remain sensitive to both inflation data and upcoming earnings results.The Risk Index rose over the past week, driven primarily by higher equity volatility and wider emerging-market sovereign and private-credit spreads, while falling gold prices limited the increase. Within G10 FX, CHF, CAD and SEK show significant positive correlations with the index, while GBP, USD and NOK have significant negative correlations, suggesting differing currency responses as risk sentiment evolves.