Investors are told to ignore short-term noise and remain invested for the long term, but it’s worth acknowledging where equity and fixed income markets have come and what macroeconomic events may impact decisions.

Paul Niven, head of multi-asset investment at BMO Global Asset Management, remarks in his strategy update there has been “plenty for both the bulls and the bears to digest” in the first six months.

He says: “Equity markets have largely dismissed the negatives and moved higher, with several major markets posting record highs. But as we move towards the half-year point, is it time to scale back risk positions?

“Europe was back in the spotlight with the announcement of a bigger-than-anticipated asset purchase programme, as well as Greece’s cash woes, not to mention the UK general election. There were concerns regarding the crisis in Ukraine and the fall-out of sanctions against Russia, as well as the volatile oil price and trying to second guess when the US Federal Reserve would start to raise its interest rate. Yet through all of these potentially unsettling issues, equity markets have mostly made further gains.”

However, the story in the bond markets has been one of volatility, as Schroders fixed income fund manager Gareth Isaac can attest. “The steep bond market sell-off since April has made a number of investors nervous, but this weakness should be viewed in the context of an overextended rally,” he says.

“The most vertiginous rises in yields have been in Europe, where bond yields have become detached from reality.”

European Central Bank president Mario Draghi says volatility in the bond markets is something investors will have to “get used” to.

Mr Isaac suggests volatility will ease in the short term as markets move towards more realistic valuations for government bonds.

But he adds: “Periods of volatility are likely to become more common in the longer term. The recent turmoil is a sharp reminder of how illiquid the bond markets can be in times of stress. What we have seen may be a small indication of what we can expect if and when interest rates begin to increase.”

The question of when the first rate rise will come lies with the US Federal Reserve. By the end of 2014 and into this year, the consensus was the Federal Open Market Committee (FOMC) would begin moving rates in June. But now many have pencilled in a US interest rate hike for September following some erratic economic data in the country.

Charles Schwab UK managing director Kully Samra says: “The tug of war continues in the Federal Reserve, with many FOMC members wanting to raise the rate sooner rather than later, while some believe it should hold off until at least the start of next year.”

Ellie Duncan is deputy features editor at Investment Adviser