Stocks slid Monday and Treasury yields fell as traders soured on the reflation trade in the wake of a hawkish pivot by the Federal Reserve. The dollar remained at about a two-month high.

Japan led the Asian equity weakness, with the Nikkei 225 down as much as 4%, while European and U.S. stock futures declined. Treasury yields retreated, taking the 30-year rate below 2% for the first time since February, as the prospect of less accommodative U.S. monetary policy buffeted markets.

The Treasury yield curve continued to flatten, unwinding one of this year’s dominant reflation bets. Short-maturity yields surged after Fed official James Bullard said inflation risks may warrant higher interest rates next year, an earlier liftoff than penciled in by many of his colleagues.

Gold stabilized after slumping last week. Oil climbed above $72 a barrel as talks between world powers and Iran dragged on, potentially delaying the return of the latter’s energy exports.

In a light week for economic data, traders will be paying close attention to appearances by Fed policy makers, including Chair Jerome Powell, for any guidance on the winding back of stimulus. In his comments, Bullard also said that the central bank has started discussing tapering asset purchases.

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