2017 was supposed to be the year that would put an end to modest growth, lukewarm inflation and anemic bond yields. It didn’t live up to the hype. But pressures are building, and that means volatility ahead—as well as opportunity.

Global growth and US growth were solid last year, so the Federal Reserve continued to slowly drain liquidity from the system. The world’s most influential central bank raised official interest rates and began the long process of reversing quantitative easing (QE), which had poured trillions of dollars’ worth of liquidity into the markets after the 2008 global financial crisis.

But counter to expectations and the Fed’s intention, bond yields remained stubbornly low (Display). In the US, long-term Treasury yields fell while shorter-dated ones rose, causing the yield curve to flatten. Prices on equities and high-yield bonds continued to rise, and US and European investment-grade credit spreads tightened as well. Overall, financial conditions were even easier by the end of the year than they had been at the start.