The current market conditions bear the hallmarks of early 2020, warns Mark Dowding, CIO, Fixed Income of RBC BlueBay. "Back then, we were already reading about the virus from Wuhan, but equity markets were still reaching new highs and investors remained unperturbed. Only when the economic reality sank in did the correction follow."

According to Dowding, the current energy shock is not of the same magnitude as the pandemic, but the impact is nonetheless "very significant". The disruptions to energy supply are particularly concerning. For instance, the International Energy Agency (IEA) recently described it as the greatest threat to energy security in history.

"It appears that the severity of the situation is primarily understood by those closest to it. This is comparable to healthcare workers during Covid, who were the first to see how serious the problem truly was," says Dowding.

He emphasises that panic is not warranted but explicitly warns against complacency. "Preparation is now essential. The coming months will offer opportunities but also shocks that investors must avoid." According to Dowding, it is therefore prudent to keep market risk limited for the time being. The well-known stock market adage 'Sell in May and stay away' could prove to be more than a cliché this year.

Read the latest updates from BlueBay CIO, Fixed Income Mark Dowding