(Bloomberg) — Treasuries rallied and equities were muted as growing signs of a world economic slowdown raised investor concern that the start-of-the-year rally in risk assets can have gone too far.

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Contracts on the S&P 500 Index were little modified after the benchmark slumped probably the most in a month Wednesday amid weaker-than-expected economic data. Nasdaq 100 futures were also little modified. Europe’s Stoxx 600 gauge halted a six-day rally. The ten-year Treasury yield declined to the bottom level since September. A selloff spread across global markets, from Japanese shares to grease contracts.

A rally driven by optimism over China’s economic reopening is starting to fizzle as data releases signal a decisive slowdown in the remaining of the world. Reports from the US showed declines in consumer demand and business investment, boosting the probability of a recession on the earth’s largest economy. That, nonetheless, didn’t deter Federal Reserve officials from reaffirming the necessity for tighter monetary policy.

“This weakness in equity markets will proceed a bit longer in this primary quarter of the yr because the market reprices what the Fed will do,” Sailesh Jha, the chief economist and head of market research for RHB Banking Group, said in an interview with Bloomberg Television.

Europe’s equity benchmark snapped the longest streak of gains since November 2021, dragged by energy and mining stocks. Australian bonds rose after the nation’s employment levels unexpectedly fell in December. Latest Zealand’s dollar fell 0.7% amid news Prime Minister Jacinda Ardern will step down next month.

Treasuries advanced across the curve, with the two-year yield shedding 4 basis points, while the 10-year rate fell 3 basis points. The dollar traded lower, with the Japanese yen contributing most to its losses.

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Within the US, Wednesday’s releases showed producer prices and retail sales fell, while business equipment production slumped. A decline in factory output wrapped up the weakest quarter for manufacturing for the reason that onset of the pandemic. Even after such a string of poor data, Fed officials repeated calls for more interest-rate hikes.

St. Louis Fed President James Bullard said policy was not yet in restrictive territory and projected a forecast rate of as much as 5.5% by the top of the yr within the Fed’s dot plot projections. is “almost” in restrictive territory but not quite. Cleveland Fed President Loretta Mester said the Fed needs “keep going” and Philadelphia Fed chief Patrick Harker repeated his view of lifting rates of interest in quarter-point increments “going forward.”

Oil fell for a second day as traders needed to contend with US recession worries in addition to one other construct in inventories. West Texas Intermediate dropped below $79 a barrel after declining almost 1% on Wednesday.

Key events this week:

• US housing starts, initial jobless claims, Philadelphia Fed index, Thursday

• ECB account of its December policy meeting and President Christine Lagarde on a panel in Davos, Thursday

• Fed speakers include Susan Collins and John Williams, Thursday

• Japan CPI, Friday

• China loan prime rates, Friday

• US existing home sales, Friday

• IMF’s Kristalina Georgieva and ECB’s Lagarde speak in Davos, Friday

Listed below are among the principal market moves:

Stocks

• The Stoxx Europe 600 fell 0.6% as of 8:27 a.m. London time

• S&P 500 futures were little modified

• Nasdaq 100 futures were little modified

• Futures on the Dow Jones Industrial Average fell 0.1%

• The MSCI Asia Pacific Index fell 0.4%

• The MSCI Emerging Markets Index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.3% to $1.0821

• The Japanese yen rose 0.6% to 128.17 per dollar

• The offshore yuan fell 0.1% to six.7765 per dollar

• The British pound was little modified at $1.2339

Cryptocurrencies

• Bitcoin rose 0.1% to $20,809.53

• Ether was little modified at $1,528.67

Bonds

• The yield on 10-year Treasuries declined three basis points to three.34%

• Germany’s 10-year yield declined three basis points to 1.99%

• Britain’s 10-year yield declined eight basis points to three.24%

Commodities

• Brent crude fell 1% to $84.13 a barrel

• Spot gold rose 0.6% to $1,916.06 an oz

This story was produced with the help of Bloomberg Automation.

–With assistance from Richard Henderson.

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