LONDON – World stocks slipped to their lowest levels in almost a month, the dollar held firm and selling again gripped the world's biggest bond markets on Tuesday ahead of data expected to show annual US inflation rising at its fastest pace in 40 years.
With US 10-year Treasury yields rising to new highs above 2.80 percent , levels last seen late 2018, unease that an aggressive policy response to inflation from the US Federal Reserve could undermine economic growth weighed on sentiment.
European shares opened 1 percent lower, Japan's blue-chip Nikkei stock index shed 1.81 percent and trade in US equity futures pointed to a weak open for Wall Street.
That all left MSCI's world equity index flagging at its lowest levels in almost a month.
Economists polled by Reuters forecast the US consumer price index would post an 8.4 percent year-over-year increase in March, versus a 7.9 percent rise a month earlier.
"Markets have decided that central banks are late and need to do more to tame inflation, and moderate volatility in equities is not enough to stop this," said Nordea chief analyst Jan von Gerich.
"The reason for the wobble in equity markets is higher rates and geopolitics."
In early London trade, US 10-year Treasury yields were up 5 basis points, while benchmark German Bund yields climbed to almost 0.88 percent, their highest level since 2015 .
Federal Reserve Governor Chris Waller on Monday described rate hikes as a "blunt force" tool that may act like a "hammer", causing collateral damage to the economy.
Higher Treasury yields supported the dollar.
The dollar index, a measure of the greenback's value against six peers, was back above 100 to touch its highest level in almost two years.
The dollar was a touch firmer at 125.50 yen, having risen on Monday to its highest since June 2015 at 125.77 .
Japan's yen has hurt by the Bank of Japan's commitment to maintaining ultra-easy policy even as the likes of the Fed embark on tightening monetary policy.
And even latest warnings from Japanese policymakers, with Prime Minister Fumio Kishida warning on Tuesday that rapid currency moves are undesirable, failed to shore up the yen, which has shed over 3 percent this month .
The euro was also down 0.1 percent at $1.0869 , unable to hold on to gains from a mini-relief rally on Monday after French leader Emmanuel Macron beat far-right challenger Marine Le Pen in the first round of presidential voting.
Brent crude rose 2.5 percent to $100.96 per barrel, while US crude was almost 2.6 percent higher at $96.77.
Spot gold was little changed around $1,953 per ounce.