Dollar rallies, stocks drop in rocky start to week: markets wrap

The dollar rallied, bond yields climbed and Asian shares slid amid unrelenting pressure on risk-sensitive assets as fears of faster inflation and global recession continued to rise.
The pound led declines among major currencies on Monday, slumping to a record low as the UK Chancellor vowed to press on with tax cuts that threaten to stoke inflation. The euro fell as investors weighed the prospects of Italy under the most right-wing government since World War 2.
Shares dropped in Japan and Australia while an index of global stocks plumbed new lows for the year. US and European stock futures fell. Hong Kong equities fluctuated.
“We’re in a period of global gloom, with pessimism blanketing different countries for different reasons,” said Ed Yardeni, president of his eponymous research firm, who warned of growing storm clouds for the US economy. “The latest data jibe with our growth recession scenario, but the risks of a full-blown recession are obviously increasing,” he wrote in a note Monday.
A dollar gauge rose to a record high. The yen slid, while remaining short of the point last week that drew intervention from Japanese authorities.
The yuan slid as China set its reference for the currency weaker than 7 per dollar for the first time in two years, while increasing the risk reserve requirement on foreign exchange sales.
The depreciation of the Korean won also continued, prompting the central bank to warn of its impact in exacerbating inflationary pressures.
“It’s a king US dollar – we’ve been seeing currencies across Asia come under pressure,” Sian Fenner, senior Asia economist for Oxford Economics, said on Bloomberg TV. “It’s adding to inflationary pressures and more central banks raising rates more than we have historically seen.”
Treasury yields remain elevated, with the two-year US rate climbing for 13 consecutive days through Friday in the longest such streak since at least 1976. Australia’s sovereign bond yields advanced, led by the policy-sensitive three-year note.
The Bank of Japan boosted its bond purchase amounts at its regular operation as the benchmark 10-year yield rebounded toward the upper end of the central bank’s tolerated trading range.
Trading this week will be punctuated by a number of economic reports including US initial jobless claims and gross-domestic-product data, along with PMI figures from China. Choppiness in price moves is likely with a steady stream of Federal Reserve officials speaking through the week.
Underscoring the concern in markets, the Cboe Volatility Index, which serves as a “fear gauge” ...