Global stocks fell and bond yields hit multi-year highs on Tuesday after consumer prices hit a record high in France and accelerated in Spain, raising expectations that central banks would continue to tighten monetary policy.
In France, EU-harmonized consumer prices rose to a record 7.2 percent in February, while in Spain EU-harmonized 12-month inflation was 6.1 percent, up from 5.9 percent in January and expectations of 5.5 percent for analysts polled by Reuters.
The pan-European index STOXX 600 It was down 0.4%, though it remains on track to gain 1.7% this month, its fourth positive month in the past five. MSCI’s global equity measure was down 0.1 percent, close to a near seven-week low hit on Friday.
MSCI’s broadest index of Asia-Pacific shares excluding Japan fell 0.4 percent to 511.39 points, close to an eight-week low hit on Monday.
In bond markets, the yield on 10-year bonds in Germany, the euro zone’s benchmark, rose 7 basis points to 2.66%, its highest level since July 2011. Similar returns in France and Spain were trading at multi-year highs.
“It’s one thing for the Federal Reserve to raise interest rates and lower inflation, but what it doesn’t want is a hard landing,” said Matthias Scheiber of Allspring. “The ISM data to be released this week will give us more clues about how the U.S. economy is coping with the rate hike.”
The yield on 10-year U.S. Treasury bonds rose 3 basis points to 3.9473 percent, after advancing more than 40 basis points in February, their biggest monthly jump since September.
In the currency market, sterling rose 0.2 percent to $1.2086, after rising 1 percent on Monday after Britain sealed a new trade deal with the EU that improves Britain’s post-Brexit outlook for the economy.
The euro gained 0.1 percent to $1.0619, after rising 0.6 percent the day before, and the Dollar Index, which compares the U.S. currency to a basket of six major currencies, was flat at 104.64, up 2.5 percent in February and on track to snap a four-month losing streak.
In raw materials, the raw advanced around 1%, while the gold It was trading at $1,810 an ounce, after falling about 6% in February.