If the financial markets were a jumbo jet, lights would be flashing in the cockpit and the pilot would be consulting the manual. After surging out of their post-Lehman Brothers nadir, markets are showing serious signs of stress. Measures of volatility are rising across asset classes. So are measures of investor fear, such as European bond spreads over German bunds. Libor rates are under pressure, as even the largest international banks find that the cost of unsecured funding may be about to move higher indefinitely.

With the global economy in recovery, the macroeconomic background should be increasing the appetite for risk. Yet global equities are down 12 per cent since mid-April. Corporate bond issuance has slowed to a trickle. Spanish 10-year bond yields have climbed above 4 per cent at auction and are 137 basis points above bunds. Three-month US dollar Libor is hovering at about 50bp, twice its level at the start of the year.

This is far from the distress after Lehman collapsed. Still, the messages the markets are sending out are not reassuring. One is that central banks may have moved too quickly to withdraw their post-Lehman liquidity strategies. Banks are finding it increasingly difficult to get unsecured US dollar funding. This is one reason the Federal Reserve has restarted its US dollar swap lines with the European Central Bank. Another is the toll of Europe's sovereign debt crisis and its implications for the solvency not just of countries but of banks.