Of course, the recovery we have seen in both currencies and stock markets on the other side of the world has helped our market, but in Asia it would be wise not to be suckered into believing this to be anything other than a dead tiger bounce. But here and in America we seem to be taking the view that the knock-on effect will not be great.
Investment perceptions are being coloured by the trend to lower inflation on both sides of the Atlantic. The likely slowdown in world growth and the availability of cheap manufactured goods should ensure that both the US Consumer Price Index and the RPI remain subdued.
Even so, the Bank of England's Monetary Policy Committee is less sanguine. In its inflation report this week, it became clear that some members still believe inflation can rise again to haunt us. Indeed, with wage settlements still trending upwards and unemployment now at its lowest level for 18 years, they may have a point. The result in London markets has been to push the pound up yet again in the belief that we may not have seen the peak of the interest-rate cycle.
In the US, demand for Treasuries has continued at a higher level. It is worth reflecting that Warren Buffet put a reputed $2bn into zero-coupon bonds last summer. Given the way this market has moved, he has almost certainly made significantly more out of bonds than he would have done in shares.
Forecasts for American inflation during the current year have been coming down. Indeed, deflation is being talked about much more widely. No wonder bonds are so popular.
The market is saying that, at the very least, inflation is not returning, even if the Monetary Policy Committee is undecided. But with that arch enemy of a rising RPI, Governor Eddie George, siding with those who felt an interest-rate rise was unnecessary, I am increasingly coming around to the view that we should be learning to live without inflation.
This suggests that it is not too late to buy British Government Stocks. Their yields have already come down significantly and it is increasingly difficult to find attractive stocks standing under par. Equally, it looks as though demand for Gilts - much of it from the pensions industry - is unlikely to wane.
For those who feel the market has reached heady heights, justifying a little caution, it is not too late to follow Warren Buffett into bonds and lock away yields that might be unattainable a few months hence. It certainly seems a safer bet than buying shares on multiples of more than 20 times earnings at a time when profits are being taken apart by the strength of sterling.
The writer is chairman of the Greig Middleton investment strategy committee.Reuse content