FX.co ★ US and European stock markets tumble amid rising inflation

The global sell-off intensified after an unexpected rise in US inflation, which will put pressure on the Federal Reserve to tighten monetary policy. Treasury bond yields traded at multi-year highs.

S&P 500 futures dropped by more than 10%, while Nasdaq 100 contracts fell even further. Indices plunged after Friday's consumer price shock report triggered a sell-off of more than $1 trillion. Today they reached new annual lows.

The Stoxx50 traded at its lowest level since early March. It seems set to hit the year's low:.

The exodus from stocks and bonds is gaining momentum on fears that central banks' battle against inflation will end up killing economic growth. Inversions along the Treasury yield curve point to fears that sharp Fed interest-rate hikes will spark a hard landing.

Traders are wagering on 175 basis points of tightening from the BOE by its September decision. This includes two half-points and one 75-basis-point increase. If that comes to pass, it would be the first time since 1994 the Fed resorted to such a draconian measure.

Meanwhile, European Central Bank Governing Council member Peter Kazimir said that he clearly saw the need for a 50-basis-point rate hike in September

What to watch this week:

US PPI, Tuesday.

• FOMC rate decision, Chair Jerome Powell briefing, US business inventories, empire manufacturing, retail sales, Wednesday.
• ECB President Christine Lagarde due to speak, Wednesday.
• Bank of England rate decision, Thursday.
• US housing starts, initial jobless claims, Thursday.
• Eurozone CPI, Friday.
• Industrial production, Friday