Enthusiasm for equities may prove premature. Morgan Stanley calculates that, since 1970, equities have outperformed bonds after the Fed's first interest rate cut, not just when it stops raising rates. Even if slower growth prompted the Fed to signal a pause, strength in the US housing market suggests rate cuts are a distant prospect.

Meanwhile, concerns over the US corporate outlook are increasing. Rising unit labour costs and inventory build-up point to pressure on earnings growth.