Global stock markets declined as a technology sector sell-off and rising expectations for Federal Reserve interest rate hikes drove investors toward the U.S. dollar and government bonds.

Key Points

• The U.S. dollar index reached 101.44, marking its strongest level since May 13, 2025, amid increased safe-haven demand.
• Markets now price in a 70% probability of a 25-basis-point Federal Reserve rate hike by September, according to CME FedWatch data.
• The Japanese yen weakened to 161.57 per dollar, nearing its lowest valuation since 1986 due to wide interest rate differentials.
• Geopolitical tensions between the U.S. and Iran regarding nuclear issues and the Strait of Hormuz are further fueling market volatility.
• Bank of Japan board members discussed potential interest rate hikes to move policy closer to neutral levels during their June meeting.

Why it Matters

The shift toward safe-haven assets reflects growing investor anxiety over persistent inflation and the potential for tighter U.S. monetary policy. This trend highlights the significant pressure on global currencies and the broader market sensitivity to central bank interest rate decisions.