This week, the first half of the Financial Times reported on bombings in Iraq, an assassination in Lebanon and continued rumblings about the supply of energy from Russia. The world looks volatile and risky. The second half of the paper, however, told of mergers, acquisitions and near record lows in the volatility of US equities. What are we to make of these two conflicting visions of the world?

The price of options on the S&P 500 index of US stocks suggests that it will move up or down by less than 1 per cent during the next month. That compares with an 8 per cent fall in September 2001 and an 8 per cent rise in the month after the 2003 invasion of Iraq. Market expectations for the volatility of other assets - bonds, currencies and interest rates - are also low.