Equities fell from Tokyo to Sydney and Chinese tech shares slid, taking an Asian stock gauge to the lowest since 2020. US and European futures were in the red. The S&P 500 dipped on Tuesday but held above the 3,900 technical level.

Australian and New Zealand debt dropped after a Treasuries selloff, which was helped along by a slew of corporate debt offerings and solid US service-sector activity. The 30-year US yield is around the highest level since 2014. The economic data spurred bets on another 75 basis points Fed interest-rate hike.

The Bank of Japan said it would boost scheduled bond purchases as the intensifying weakness in Treasuries puts upward pressure on global yields.

The Bloomberg Dollar Spot Index hit another record, the yen slid to a fresh 24-year low and China set its yuan reference rate with the strongest bias on record – a signal of discomfort with currency weakness. Greenback strength is rippling across the world, squeezing financial conditions and stoking inflation in other economies as rival currencies drop. 

Markets are also contending with a debilitating energy crisis in Europe and Covid lockdowns in China, which continues to pursue a strategy of eliminating the virus despite the attendant economic cost. Concerns are growing about the outlook for company earnings given the various global economic headwinds.

“Many investors are walking on eggshells,” Kristina Hooper, chief global market strategist at Invesco, said on Bloomberg Television. “The real issue is that it could be a one-two punch. We could see the Fed continuing to pummel the economy with a significant rate hike, lets say 75 basis points, and then of course we get downward revisions to earnings that are significant.”

Bitcoin held a retreat below $19,000. Crude dropped under $86 a barrel, hampered by worries about demand. Gold slipped below $1,700 an ounce.

Fed chair Jerome Powell “knows they need to be very aggressive for a lot longer than people think because they don’t only want to get inflation under control, they want to get it stable for a persistent period of time”, said Shana Orczyk Sissel, Banrion Capital Management founder and president, on Bloomberg Television. BM