Photographer: Qilai Shen/Bloomberg

Global bonds began to stabilize from an aggressive selloff that drove steep losses in Treasuries and U.S. stocks Thursday. Asian stocks slumped.

Benchmark Treasury yields fell back below 1.5% in Asian trading and Australian bonds pared losses. Japan’s benchmark traded close to its highest since early 2016. The dollar steadied after strengthening overnight. On Thursday, a poorly received Treasury auction saw the 10-year Treasury yield surge as much as 23 basis points to 1.6%. The selloff accelerated as holders of mortgage securities were forced to offload government bonds.

Stocks fell more than 2% in Hong Kong, Japan, South Korea and Australia. S&P 500 futures dipped after the benchmark closed down 2.5% with tech shares leading losses. The Nasdaq 100 tumbled 3.6%, the most since October, as investors rotated away from pandemic-era winners toward companies poised to benefit from an end to lockdowns. Still, stocks popular with the day-trader crowd surged once again, with GameStop Corp. doubling at one point before ending 19% higher.

Investors are betting on a sharper-than-expected rebound for the global economy, with some growing increasingly worried that accelerating inflation could trigger a pullback in monetary policy support. Federal Reserve officials so far say surging Treasury yields reflect optimism and have stressed that the central bank has no plans to tighten policy prematurely.

“It’s all about interest rates,” said Randy Frederick, vice president of trading and derivatives for Schwab Center for Financial Research. Tech “has been a relative outperformer. As it led on the way up, it will likely lead on the way down too.”

The 10-year U.S. yield adjusted for inflation rose to its highest level since June, a warning sign for riskier assets that have benefited from exceptionally loose financial conditions amid the pandemic.

In remarks this week, Federal Reserve Chairman Jerome Powell offered reassurance that policy would continue to be supportive and look beyond a temporary pick-up in inflation, especially from a low base. Nevertheless, money-market traders have now almost fully priced in a first rate hike by the end of next year.

Read more: Soaring U.S. Yields Send Risk Assets Warning as Real Rates Rise

Elsewhere, oil retreated from its the highest in more than a year as traders mulled depleting global inventories. Bitcoin traded below $50,000 again. Gold was steady after an overnight decline.

Some key events to watch this week:

• Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.

These are some of the main moves in markets:

Stocks

• S&P 500 futures were down 0.1% at 10:37 a.m. in Tokyo. The S&P 500 Index fell 2.5%.
• Japan’s Topix Index fell 2%.
• S&P/ASX 200 fell 2.3%.
• South Korea’s Kospi Index fell 2.7%.
• Hang Seng Index fell 2.7%.
• Shanghai Composite Index fell 1.9%.

Currencies

• The Bloomberg Dollar Spot Index was steady after gaining 0.6% Thursday.
• The euro fell 0.1% to $1.2160.
• The British pound fell 0.2% to $1.3994.
• The Japanese yen steadied to 106.24 per dollar.
• The offshore yuan rose 0.1% to 6.4829 per dollar.

Bonds

• The yield on 10-year Treasuries slipped 3 basis points to 1.49%.
• Australia’s 10-year yield was up 9 basis points at 1.82%.

Commodities

• West Texas Intermediate crude fell 0.2% to $63.02 a barrel.
• Gold was down 2% at $1,769 an ounce.

— With assistance by Vildana Hajric, and Claire Ballentine