In April trading and for the early parts of May, it has been a case of sell everything and rush to the dollar. All the talk in town was about deleveraging flows as market participants turned to cash instead.

But since last week, we're seeing risk flows start to become fashionable again as it returns to be a key driver of trading sentiment. So far this week, that isn't so much so different as evident also by today's price action.

I would argue a lot of this comes as we see a calmer mood in the bond market, whereby the unrelenting selloff has taken a bit of a pause. 10-year Treasury yields did drop from a high of 3.20% to below 3.00% currently:

US10Y

The bigger picture trend is still intact and the deleveraging story may not be over just yet. But for now at least, we can get a sense that when the pressure is off, the market is back to focusing on risk flows at least.

In that regard, the better COVID-19 situation in China and somewhat maximum hawkishness priced in for the Fed are perhaps two key reasons helping risk assets to breathe a little easier. That said, it comes after an unrelenting beatdown even in early May trading, especially for US stocks.

And as much as there is some optimism, the more dour economic outlook and  inflation  view may still weigh further on equities in the months ahead.