The bond rout has spilled over into equity markets. The Dow Jones Industrial Average plunged 400 points, with the S&P 500 and Nasdaq Composite also posting significant losses. Oil price volatility has further amplified the selling pressure.

Analysts say the sharp bond market adjustment reflects investors repricing expectations for Federal Reserve policy. With inflation data repeatedly exceeding forecasts, markets are digesting the reality that interest rates will remain elevated for longer than previously anticipated.

Central banks around the globe face an increasingly difficult balancing act: fighting persistent inflation without triggering an economic downturn – a challenge that has grown considerably more complex in the current environment.