A surge of more than 10% in oil sent shivers through risky assets Tuesday, reversing an early recovery in American stocks and sending some European markets down 4%. Bonds rallied amid concern about the impact of war on global economies, with 10-year U.S. yields posting their worst four-day drop since July.Equities pushed lower as a jump in crude above $105 a barrel raised fears about higher inflation that could complicate the Federal Reserve’s job at a time when Russia’s invasion of Ukraine is seen as a potential threat to the economic recovery. Bonds climbed across the curve, led by short-dated tenors, with swaps linked to the Fed’s March 16 meeting pricing in about 25 basis points of tightening. Oil soared even as the U.S. and other major economies agreed on a coordinated release of stockpiles.Fed Chair Jerome Powell will try to reassure lawmakers this week that the central bank will act to curb the hottest inflation in four decades while remaining flexible in the face of geopolitical uncertainties. Powell — in a semiannual monetary-policy testimony to House and Senate panels starting Wednesday — is likely to signal the Fed will go ahead with plans for raising rates in March.
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