After a bumper first quarter that was fuelled by central bank largesse, investors in the markets are now looking for potential potholes to derail a stock market rally that has already shown signs of tailing off in recent days.

"The upside potential in the equity markets is not exhausted yet; however, we no longer expect above-average returns in the coming months," said Philipp Baertschi, chief strategist at wealth manager Bank Sarasin.

From Reuters.com:

The S&P 500 is set for a 12 percent gain since the start of the year and, despite wobbling over the past week, Japan's Nikkei .N225 is still up more than 19 percent, its strongest first quarter rise in 24 years.

Aside from signs of a burgeoning U.S. recovery, the turn in sentiment was powered by the European Central Bank's creation of more than a trillion euros of three-year money, augmented by more money printing by the Bank of England and hopes that the Federal Reserve would do the same.

A repeat dose is now looking less and less likely, making for a very different investment climate, despite warnings over the past week from Fed chief Ben Bernanke and the Bank of England's Mervyn King that recovery remains highly uncertain.

"Government yields, close to generational lows, still look unattractive and we expect Treasury yields to bubble higher over the next few months as the euro zone risk premium is unwound and as the market adjusts to the reality of better economic data," said Nick Gartside, International CIO for Fixed Income at J.P. Morgan Asset Management.