US equity investors have been remarkably nonchalant about the slow-motion correction under way in credit markets. After a sell-off in the middle of last month on rising bond yields and problems at two Bear Stearns hedge funds, there has been a sharp equity rally.

Since June 26, the S&P 500 has jumped more than 4 per cent to a record high. The traditional “wall of worry” bull markets must scale has not proved much of a hurdle. The collective wisdom is that the factors driving equity gains – solid earnings, takeover activity and liquidity – will not be derailed by credit market tremors.