Something shifted in global markets last week, and not for the better. In both bonds and equities, the mood has darkened.

To start with bonds, last week fixed income markets seemed to collectively decide that the inflation unleashed by the Iran War and energy crunch deserves to be taken seriously.

Yields surged everywhere (bond prices move inversely to yields). The long end of the curve was particularly brutal; 30-year yields ended the week above 4% in Japan (where equivalent rates have spent the better part of the last decade around zero), approached 6% in the UK (for the first time since 1998), and above 5% in the US.

These are not small moves. Even at the short end things are looking scary; the US two-year yield has risen 20bps in the past 10 days. Futures markets are now pricing in more than a 50% chance of at least one rate hike in the US by year end. One week ago, that probability was barely 15%.

South Africa has not been immune. Over the past month the benchmark SA 10-year government bond has risen by more than 60bps, a reminder that SA - despite its own unique domestic political and economic challenges - remains tethered to global capital flows. When the world's investors grow fearful of inflation and need additional compensation to...