It really shouldn’t have come as much of a surprise to learn that the Federal Reserve might be looking to reduce its $85billion per month bond purchase programme, but nevertheless, the announcement when it came has sent a tremor through bond and equity markets around the world.

Ben Bernanke announced that the US Central Bank was preparing to scale back or “taper” its monthly asset purchases, but only so long as improving US economic conditions allowed.

Such is the fragility of investment markets that such a nuanced warning could cause an upset on this scale shows what little tolerance there is to a shift in policy.

However, by extension, this could be seen as marking the beginning of the end of central bank support in the developed economies.

Such a move will of course accelerate the beginnings of a selloff in bond markets which is already under way.

This is reflected in the yields on 10 year UK government bonds rising to 2.53% the highest since August 2011.

Fears that rising yields will undermine the case for equities saw the FTSE100 experiencing its worst slump since September 2011 and is now back at levels seen in January.

Supporters of equities continue to argue that valuations are far from stretched in an historical context and such weakness could seen as a further buying opportunity for income seekers with the average historical yield on the All Share index now at 3.60%.

However, equities remain vulnerable to further bad news; possible emanating from the euro zone, where the Greek coalition remains vulnerable or from China, where dire manufacturing data accompanied by a huge increase in short term money market rates triggered worries about a possible credit crunch.

These are puzzling times for investors.

: : Mark Marshall is an investment manager with Charles Stanley & Co in Ipswich.