Selling in May and going away has worked every year since 2010—and seems to be the popular strategy for 2013 as well. Yet the recent weakness in equities is different from the previous summer sell-offs. It is occurring with no specific news trigger (even “Fed tapering” is all conjecture), and bonds have not rallied. We are now experiencing the somewhat unusual occurrence of a simultaneous drop in fixed income and equities...

In the latest Five Corners biweekly review of global economics and investment: Investment overview: Protests are erupting throughout the emerging markets—Simon Pritchard looks at whether these are connected by a common economic thread.US: Will Denyer looks forward to the day when the Fed is ready to tighten. Unfortunately that day is not today.Europe: The euro is being boosted by the repatriation of funds from stressed emerging markets. Francois Chauchat explains why this will be a temporary effect.Asia: Japan is back to where it was before the announcement of an unprecedented doubling of its monetary base – Joyce Poon and Yuchan Li see this is as a buying opportunity.Resources: Nate Taplin takes the long view on the Australian dollar and Chilean peso...

Equities have started to roll over, while bond markets seem to be struggling, with the US 10-year yield now hovering at 2.2%, after breaking out of the trading range that has been in effect since early 2012. And because inflationary pressures continue to fall, this means that real yields are moving into positive territory. Our latest Quarterly is devoted to answering the question of whether rising real yields is a good or a bad omen...

Short-term pullbacks of 10% or more are nothing out of the ordinary for Asian equity investors. However, the sell-off that started on May 22nd is troubling. It is occurring on no major news (no Fukushima disaster, no SARS-type health scare, no Sino-Forest corporate scandal, etc); and it is rather indiscriminate, with the correlation among all stocks, and all asset classes, shooting up. Even the safest of the region's government bond markets (Hong Kong and Singapore) have been selling off aggressively (drops of more -5% at the long end). In recent weeks, Asian markets have felt as if in full “liquidation mode.” This raises the question—who is liquidating?...

Charts of the week New construction continues to lag behind property sales in China, leading to weak heavy industry growth and declining steel prices. Property sales did decelerate to 28% YoY in May from 40% in Apr, and a much higher base in H2 means they will slow further. But if sales volumes do not collapse, full-year growth is still likely to reach high single digits. In this context the supply crunch looks overdone: property completions fell -12% in Mar-May, dragging YTD growth down to 5% (after double-digit growth in 2011-12). Very weak construction starts since late 2011 mean we expect further falls in completions. So while we do think demand in smaller cities will remain weak, the outlook is not all negative. In particular, the combination of healthy sales and slowing completions means that...