September was the month when central banks took back the initiative. Five central banks made decisions in just over two weeks, and most of them ended up on the tighter side of expectations. The Federal Reserve raised interest rates on September 16, and the question in the market shifted from whether to raise rates to how many more hikes remain.

The reaction was most visible outside the stock market. Interest rate volatility reached its highest level of the year at the end of a month and credit spreads widened, while the stock market's own volatility measure only rose slightly. Stock markets fell moderately but broadly, most notably where interest rate sensitivity is greatest.

This says something about how risk needs to be measured. Two exposures that look equally risky in an equity measure can have completely different sensitivities to interest rates and credit. That's why we monitor interest rate and credit exposure as closely as we do to equities, and keep protection when it's cheap relative to the uncertainty elsewhere.