The dollar declined against its major trading partners, bond prices fell around the world and equities tumbled as the standoff between Greece and its creditors seemed to harden with an IMF payment looming in one week.
The yield on 10-year Treasury bond rose four basis points to 2.19 percent, the highest it has paid in almost eight weeks, following German, Spanish, Portuguese, Italian and French yields higher. The dollar lost ground against the euro, the yen, sterling and most other currencies.
Beginning in Asia exchanges fell around the world. The Shanghai Composite lost 4.06 percent to 4,298, it lowest close in two weeks, though it remains 75 percent higher over the past six months. The Hang Seng in Hong Kong shed 1.3 percent. Only in Japan did the Nikkei 225 managed to eke a tiny 0.06 percent gain.
For Europe the losses were uniform. The Athens General Index fell 3.85 percent, the Italian FTSE MIB dropped 2.76 percent, the British FTSE slipped 0.84 percent, the Dax in Germany lost 2.51 percent and the Paris CAC sank 2.21 percent.
In the United States the Dow lost 0.70 percent, 142 points to 17,298 with the S&P 500 skidding 1.18 percent to 2.089, its biggest fall since March 25th.
The collapse of prices in sovereign-debt markets is picking up speed as investors, particularly institutions, doubt the permanence of rallies that pushed yields to record lows. The selling is continuing despite the European Central Bank's commitment to a quantitative easing program of 60 billion euros a month of debt purchases that is designed to last until the end of next year.
Officials of the IMF began the equity and bond slide when they suggested that Greece needed further debt relief from its creditors.
Almost all remaining Greek debt is owned by public entities who have not had any write down on their holding, unlike private owners who suffered large devaluations in the previous Greek bailouts.
Of immediate concern to the markets is Greece’s 750 million euro payment due to the IMF on May 12th, next Tuesday. There is considerable doubt whether the Athens government will have the cash to make the note unless it is granted access to the remaining 7 billion euros in bailout cash.
Chief Market Strategist
WorldWideMarkets Online Trading