Last week was highly eventful, yet investors shrugged off most of the developments that drove the headlines. President Trump’s comments at the G7 meeting the previous weekend generated a lot of criticism, but investors mostly ignored any possible implications. Similarly, the U.S./North Korea summit appeared to open the way for further dialogue, but did not move the markets.

As volatility has returned to global financial markets in the first half of 2018, emerging markets debt, one of the strongest-performing fixed income asset classes over the past two calendar years, has been one of the hardest-hit segments of the bond market.

The U.S. Federal Reserve (Fed) raised rates on Wednesday, citing a strong U.S economy and rising inflation. The European Central Bank announced its planned wind down of asset purchases through 2018 and pledged not to raise interest rates until after the summer of 2019.

We could be forgiven for thinking Europe was a trouble-free haven of stability. After all, investors have flooded into its capital markets, chasing a glut of super stimulus from the European Central Bank (ECB), economic recovery has flourished, and political problems appear to be a thing of the past.