# Stocks tumble on inflation fears, Treasury yields jump
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-05-05
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Global Equity Markets Slump as Treasury Yields Rise Amid
Meta Description: Investors fret as U.S. Treasury yields climb and stock markets tumble amid fears of a global slowdown and aggressive central bank actions to combat inflation.
URL: https://financedigest.com/stocks-tumble-on-inflation-fears-treasury-yields-jumphtml

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By Herbert Lash and Marc Jones

NEW YORK/LONDON (Reuters) – U.S. Treasury yields rose and a gauge of global equity markets slumped on Thursday, erasing much of the prior day’s relief rally, as [investors](https://www.financedigest.com/the-rising-power-of-retail-investors-how-individual-traders-are-shaping-the-stock-market.html) worry central [banks around the world need to aggressively tackle high inflation](https://www.financedigest.com/bank-of-england-still-needs-to-see-the-job-through-on-inflation-pill.html "Bank of England still needs to ‘see the job through’ on inflation: Pill") as growth slows.

A sharp decline on Wall Street snuffed a rally in European stocks as [fears of a recession](https://www.financedigest.com/banking-turmoil-means-recession-fears-are-creeping-back.html "Banking turmoil means recession fears are creeping back"), as the Bank of England suggested after it hiked rates, squashed enthusiasm from Federal Reserve Chair Jerome Powell’s remarks on Wednesday. He said policymakers were not [considering 75 basis-point moves in the future](https://www.financedigest.com/finnish-centre-right-eyes-coalition-talks-as-defeated-marin-considers-future.html "Finnish centre-right eyes coalition talks as defeated Marin considers future").

The yield on 10-year Treasury notes rose 16.9 basis points to 3.084%, while inflation-hedge [gold bounced higher after Powell also emphasized risks to the economy from soaring inflation](https://www.financedigest.com/stocks-and-gold-cheer-u-s-inflation-picture-while-dollar-slides.html "Stocks and gold cheer U.S. inflation picture, while dollar slides").

It’s a very messy environment for investors right now,” said Anthony Saglimbene, global [market strategist at Ameriprise Financial](https://www.financedigest.com/the-political-wildcard-what-is-trumps-us-presidential-nomination-doing-to-financial-markets.html "The political wildcard: What is Trump’s US presidential nomination doing to financial markets?"). There’s an overall [negative sentiment in the market.”](https://www.financedigest.com/pmrs-report-on-global-triple-negative-breast-cancer-treatment-market.html "PMR’s Report on Global Triple Negative Breast Cancer Treatment Market")

[Markets will remain volatile until there is a clear picture on Fed rate policy](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") and its trajectory later this year, he said.

[Investors are “worried that when we get to the back](https://www.financedigest.com/glencore-courts-120-teck-investors-for-bid-backing-as-spinoff-vote-looms-source.html "Glencore courts 120 Teck investors for bid backing as spinoff vote looms -source") half of this year, the Fed is going to be so aggressive with raising interest rates that they’re going to take the economy into a recession.

MSCI’s gauge of [stocks across the globe shed](https://www.financedigest.com/stocks-shed-gains-treasury-yields-jump-as-fed-signals-rate-hikes-could-come-soon.html "Stocks shed gains, Treasury yields jump as Fed signals rate hikes could come ‘soon’") 2.31% and the pan-European STOXX 600 index lost 0.82%.

On [Wall Street](https://www.financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarks.html "Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks"), the Dow Jones Industrial Average fell 2.63%, the S&P 500 lost 3.09% and the Nasdaq Composite dropped 4.32%.

Britain’s pound and government bond [yields fell sharply after the BoE raised rates to their highest since 2009 and warned the UK economy](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") was at risk of recession.

Sterling was last at $1.2352, down 2.13% on the day, while the [euro was down 1.01% to $1.0514 after dire German industrial orders data](https://www.financedigest.com/dollar-slips-after-upbeat-china-data-euro-pound-rise.html "Dollar slips after upbeat China data; euro, pound rise").

The German economy is programmed for a downturn,” said Thomas Gitzel, [chief economist at VP Bank](https://www.financedigest.com/deutsche-bank-names-eigendorf-new-chief-sustainability-officer.html "Deutsche Bank names Eigendorf new chief sustainability officer").

The war in Ukraine, the supply chain problems and high [rates of inflation](https://www.financedigest.com/german-inflation-rate-to-ease-over-course-of-2023-econ-minister.html "German inflation rate to ease over course of 2023 – econ minister") are spoiling companies’ appetite for investment,” he said, adding that a [recession](https://www.financedigest.com/low-use-of-shortened-work-hours-points-to-mild-german-recession-ifo.html) was becoming increasingly likely.

The dollar index rose 1.131%, rebounding after falling sharply on Wednesday following the [Fed’s rate hike](https://www.financedigest.com/asian-shares-gain-as-fears-about-rapid-fed-hikes-bank-crisis-fade.html "Asian shares gain as fears about rapid Fed hikes, bank crisis fade"). It is up more than 7% so far this year. \[/FRX\]

[China’s battered shares](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high") recovered some ground, gaining 0.7% as mainland markets resumed trade after a three-day holiday.

[Investors also cheered](https://www.financedigest.com/despite-the-headwinds-investors-have-important-reasons-to-be-cheerful.html "DESPITE THE HEADWINDS, INVESTORS HAVE IMPORTANT REASONS TO BE CHEERFUL") a pledge by China’s central bank for more monetary policy support to help businesses badly hit by the latest COVID-19 outbreak.

[Oil prices rose as a stronger dollar offset supply concerns](https://www.financedigest.com/oil-near-flat-as-us-crude-stock-draw-contends-with-economic-concerns.html "Oil near flat as US crude stock draw contends with economic concerns") after the European Union’s plans for new sanctions against Russia, including an embargo on crude in six months. Traders noted OPEC+ again rebuffed [consumer calls for a faster pace of output rises](https://www.financedigest.com/factbox-how-far-are-uk-energy-bills-set-to-rise-and-what-help-are-consumers-getting.html "Factbox-How far are UK energy bills set to rise and what help are consumers getting?").

U.S. crude was last up 0.89% to $108.77 per barrel and Brent was at $111.48, up 1.22% on the day.

(Reporting by Herbert Lash, additional reporting by Marc Jones in London; editing by Chizu Nomiyama, Alexandra Hudson and Susan Fenton)


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