Global stocks and government bonds plunged again on Monday and the dollar hit two-decade highs, as red-hot U.S. inflation fuelled worries about even more aggressive policy tightening in a big week for central banks.
Underscoring concerns that tighter monetary conditions may cool the U.S. economy to the point of bringing on a recession, the gap between U.S. two- and 10-year Treasury yields inverted on Monday for the first time since April, an occurrence that can herald an economic contraction.
The S&P 500 index has dropped over 20% since a recent record close, pushing it into a bear market.
The sell-off came on the heels of data that showed U.S. inflation accelerating more than expected in May.
The figures quashed bets that the Federal Reserve was gaining the upper hand in taming soaring prices.
The Fed could hike interest rates by 75 basis points at its policy meeting this week.
Rising U.S. yields and the flight to safety pushed the dollar index to a high last seen in December 2002.
Against the yen, the dollar retreated from Monday’s peak of 135.22 yen, a level not seen since October 1998.
The pound sank 1.5% after data showed the UK economy unexpectedly shrank in April.
Multiple indicators of global growth in markets slumped on Monday from technology shares in Hong Kong to the Australian dollar as investors fled to the perceived safe haven of the U.S. dollar.
Expectations of even more aggressive rate hikes from central banks around the world have led investors to sour on the global growth outlook.
Cryptocurrency bitcoin sank 11.7% to the lowest since December 2020 at $23,462 while crude oil prices swung between gains and losses.