In the third quarter, Carlyle, one of the largest alternative investment managers, took advantage of access to cheap credit to complete more than $700m in dividend recaps. A number of its portfolio companies borrowed, with the proceeds going to pay their owners’ generous dividends, thereby swelling returns to Carlyle and its investors. The credit markets have been complacent this year, enabling the financial engineers and users of other people’s money such as Carlyle to prosper disproportionately. This came as a happy surprise, given that all year financial observers expected rates to rise. With the “taper” now tapered, might that finally change?

The hope is a strong recovery will offset the end of the Fed’s third bout of quantitative easing. To optimists, this means even if rates move up, credit will still be abundant and equity markets will continue buoyant, with only the hit from a stronger dollar reducing corporate earnings. Moreover, the vast expansion of the Bank of Japan’s asset purchases should mean liquidity will remain plentiful.

But that expectation may prove too benign. While changing conditions are likely to prove especially challenging to those who have been the greatest beneficiaries of central government liquidity such as the private equity groups, almost all investors are struggling. October was a tricky month for investors to navigate – and October is likely to be more a foreshadowing of what is to come than an aberration. In the Treasury market, a report from Merrill Lynch suggests that “the impact of Fed tapering was temporarily masked by increased Treasury buying by China and the US banks that is now slowing”.