All wars wax and wane, and battlefields are left behind. For investors following 2009’s titanic struggle between bulls and bears, this week feels like a pivotal moment. Most binoculars are on America. The S&P 500 index has paused for breath after finally breaking into positive territory for the year. Three-quarters of companies in the S&P 500 have now reported earnings. On Thursday, bank stress test results are released.

Such has been the momentum of the bulls of late that perhaps they will overrun these events. Equity markets across the developed world have jumped by a third. Emerging stocks are on fire. Meanwhile, risk indicators are retreating. Three-month dollar Libor dropped below 1 per cent on Tuesday and its yield spread over overnight index swap rates is the lowest since the third quarter, reflecting a willingness among banks to trust each other again.