Financial markets are headed for an unusually bad year, with the overall global bond and equity universe shrinking by a cumulative $5tn since the start of 2018 — the biggest contraction of capital markets since the financial crisis.

Parallel declines in both bonds and equities are rare, as stocks tend to do better when growth is robust and fixed income thrives more in subdued or poor economic conditions. In 2008 the global equity market shrank by more than $18tn, even as the bond market was buoyed by investors desperate for the relative safety it offers. 

But 2018 is starting to look like an inflection point for the post-crisis market era, as central banks have started paring back monetary stimulus. The Federal Reserve has led the charge, lifting even three-month Treasury yields to a 10-year high of 2.37 per cent this week. That has left almost every major asset class  nursing losses in 2018.