Stocks sank deeper into a bear market Tuesday amid growing expectations of sharper Federal Reserve interest-rate hikes to fight inflation.

An Asian share index fell over 1.5%, with bourses from Japan to China and Hong Kong in the red. But US and European futures pushed higher, hinting at some stabilization in sentiment after a three-day rout in the S&P 500 of nearly 9%.

Shorter-maturity Treasuries dropped while longer tenors edged up following a rout Monday, deepening a yield curve inversion that underscores worries about an economic downturn sparked by tighter monetary policy. 

Australian and New Zealand debt retreated, while the Bank of Japan boosted bond-purchase operations to keep yields in check. The yen dipped and was near a 24-year low against the dollar. 

Traders now see about 200 basis points of tightening by the Fed’s September decision and the possibility of a 75 basis-point hike. They expect the overnight rate to peak at 4% by mid-2023.

Speculative investments have suffered in the risk-asset selloff. Bitcoin slid as much as 10% to around $21,000 before paring a chunk of the retreat.

The highest inflation in a generation, stoked by supply-chain and commodity-market disruptions amid China’s Covid struggles and the war in Ukraine, is roiling the outlook.

The big question is how much the Fed and others will have to tighten financial conditions to quell price pressures, risking a recession.

Bets on a 75 basis-point Fed move hardened following a Wall Street Journal report suggesting the larger increment was now in play. Some commentators even floated the idea of a 100 basis-point hike.

In commodities, oil held above $120 a barrel as investors evaluated a tight supply outlook and the impact of China’s eventual return from virus curbs.