Major changes are coming to capital markets–and they’re coming fast. The era of easy monetary policy is drawing to a close, with the Federal Reserve already hiking and the European Central Bank preparing to curtail asset purchases by the end of the year. The low interest rates that buoyed asset prices for the last decade are rising, and inflation is slowly grinding higher. Economic growth, while still solid, has likely peaked. With these changes and heightened political risk around the globe, volatility has returned to capital markets.

Investors, in other words, have much to digest as we head into the second half of the year. In this quarter’s Capital Markets Outlook, we discuss the importance of searching for high-growth companies with solid balance sheets in equities, keeping fixed-income allocations balanced between credit and rates and remaining mindful of the need for downside protection. The chance that either policy or politics will push inflation, interest rates or both higher at a significantly faster pace is a substantial tail risk that warrants investors’ attention.