Again, half right. The S&P 500 dropped 5.3 percent in the two days following Brexit and the CBOE Volatility Index shot up 49 percent, to the highest since the peak of selling in February. But the spike was erased in less than a week and the fear gauge closed Wednesday at 11.77, the lowest in almost two years.

Emerging-Market Revival

It’s the same story in corporate bonds, where the extra yield demanded by investors to compensate for credit risk has narrowed to roughly the lowest level in a year. In foreign exchange, an MSCI index of emerging-market currencies from Brazil to Russia has rebounded from a six-year low in January.

Hazards are proliferating. A global index tracking the exposure of 77 countries to political risk is flashing some of the highest readings in a decade, according to New York-based research firm Eurasia Group. Scores are calculated using monthly surveys on government stability, social stability, security, economic policies and investment policy.

The fat returns investors once demanded to compensate for heightened political uncertainty has been diluted by central-bank money. Assets purchased by the Bank of Japan and European Central Bank not only pushed yields on about $10 trillion of debt worldwide below zero, they’ve squeezed investors out of government bonds into riskier terrain -- stocks, corporate bonds and emerging markets.

‘Upside Down’

“We are in a world where you’re going to fixed income to get your capital appreciation, and you’re going to equities to get your yield,” said Bhanu Baweja, the London-based head of emerging-market cross-asset strategy at UBS. “It’s an upside-down world.”

At 2.1 percent, the S&P 500’s dividend yield is half a percentage point higher than the 10-year Treasury rate. The gap stretched to one of the widest levels ever earlier in the month. At the same time, the iShares 20+ Year Treasury Bond exchange-traded fund has posted a total return of 16 percent in 2016, compared with the S&P 500’s gain of 7.6 percent.

The potential for distortion rises as policy makers double down on unconventional measures to stave off recessions. Even after years of keeping rates at record lows, global growth has trailed past cycles and economies from Japan to Europe are still struggling along the edge of deflationary spiral.

A Bank of England official said this month "material easing" is likely and that a "sledgehammer" might be used. Economists speculate Japan is mulling helicopter money, where fiscal stimulus would be funded by money printing by central banks. Even policy makers at the Fed, the only major central bank attempting to wean investors off easy money, stressed there’s no rush to raise borrowing costs again.