U.S. stocks entered a bear market, Treasury yields spiked to levels not seen in a decade and the dollar rallied as the fallout from a hot inflation reading continued to rattle global trading already shaken by worries the Federal Reserve will plunge the economy into a recession.
Another brutal bout of selling sent the S&P 500 to the lowest since January 2021 and down more than 20% from its record. Highly valued tech shares bore the brunt of the rout, with the Nasdaq 100 slumping over 4.5%. The Cboe Volatility Index topped 30 and the futures curve inverted in a rare instance of traders pricing in more uncertainty in the here-and-now than in three months. Speculative areas of the market inflated by years of government largesse buckled. Profitless software firms, newly public companies and blank-check entities sold off. Bitcoin plummeted below $24,000 after a lending platform ceased operations.
Credit markets continued their historic repricing of rate trajectories. Treasury 10-year yields climbed to the highest since 2011, while two-year rates jumped to levels last seen before the 2008 financial crisis. The cost to protect investment-grade debt from default soared as a closely watched segment of the U.S. bond curve inverted. Only the dollar provided a respite from the selloff, rallying to a two-year high.
