Stocks sink as bonds convulse, dollar rally builds: Markets wrap

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An accelerating selloff in US government bonds is starting to spread havoc across financial markets, pushing up borrowing costs, weighing on currencies and driving stocks toward a technical correction.

So crucial are US interest rates to global markets that investors are having to recalibrate wagers on everything from stocks to currencies as they come to the view that Federal Reserve monetary policy will remain tight for an extended period. A further wave of selling broke out across markets Tuesday after better-than-expected US job openings data reinforced bets the central bank isn’t done raising rates.

Dollar gains Bloomberg’s gauge of dollar strength rose for a third day after climbing to the highest since November on Tuesday, bolstered by surging Treasury yields. The yield on Chinese investment-grade dollar credit rose to an 11-month high, having climbed more than 100 basis points from May’s low. Spreads, though, remain well within this year’s range. China is in the midst of a week-long holiday.

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