EUROSTOXX 50 and FTSE futures both slowed by 0.3 percent in Europe. S&P 500 stock futures lost early gains to drop 0.6 percent, while Nasdaq futures fell 0.5 percent. Both are not close to the highs of last year, with the S&P falling for six straight weeks.
MSCI's broadest index of Asia-Pacific shares outside Japan lost early gains to a new low of 2.7 percent last week when it hit a two-year low.
Japan's Nikkei clung to gains of 0.5 percent, having lost 2.1 percent last week, even though a weak yen offered some support to exporters.
A hyper-hawkish Federal Reserve has led to a sharp tightening of financial conditions, which led Goldman Sachs to cut its 2022 GDP growth forecast to 2.4 percent, from 2.6 percent. The growth in 2023 is now 1.6 percent, up from 2.2 percent on an annual basis.
The financial conditions index has narrowened by over 100 basis points, which should lead to a drag on GDP growth of about 1 pp, according to Goldman Sachs economist Jan Hatzius.
In part because we think the Fed will deliver on what is priced, we expect that the recent tightening of financial conditions will continue. Futures imply 50 basis-point hikes in June and July and rates between 2.5 -- 3.0 percent by the end of the year, from the current 0.75 -- 1.0 percent.
Fears that the tightening will lead to a recession spurred a rally in bonds last week, which saw 10 year yields drop 21 basis points from peaks of 3.20 percent. Early on Monday, yields were easing to reach 2.91 percent.
The dollar came off a two-decade top, though not by much. The dollar index was last at 104.560 and within a spitting distance of the 105.010 peak.
The euro was at $1.0403 after getting as low as $1.0348 last week. The dollar fell to 129.02 yen after the collapse of TerraUSD, a so-called stable coin, which seemed to get a safe-haven bid.
In commodity markets, gold was pressured by high yields and a strong dollar, and was last at $1,809 an ounce, having lost 3.8% last week.
Oil prices reversed course. Brent lost $2.31 to $109.24, while US crude fell $2.14 to $108.35.