Stocks on Wall Street were under pressure, while the dollar hit its highest level against a basket of major currencies in nearly two years as investors braced for central bank tightening to curb inflation.

The S&P 500 fell 0.5% in early trade and was on track for its first weekly loss in a month, as the tech-heavy Nasdaq Composite dropped 1.2%. In turn, the FTSE World Index of developed and emerging market stocks fell 0.3% on Friday and remained on track for a weekly loss of around 1.8%.

Meanwhile, the U.S. dollar index, which charts the greenback against six currencies including the euro and sterling, rose 0.4% to its highest level since May 2020.

In the government debt market, the yield on the 10-year U.S. Treasury note, which affects global borrowing costs, rose 0.04 percentage point to 2.69% on Friday, representing a decline in the price of the benchmark government debt instrument.

U.S. Treasuries continue to fall worst quarter Returns on the $23 trillion U.S. government bond market since at least 1973, as Russia’s invasion of Ukraine fueled pandemic-induced inflationary pressures, clouding the economic outlook.

“Unfortunately, the themes that dominated the market in the first quarter are still in play,” said Paul O’Connor, head of Janus Henderson’s multi-asset team in the UK.

“Every now and then, you might see a little bit of enthusiasm, but that’s met with strong resistance from central banks [monetary] Austerity and the war in Ukraine – neither has eased. ”

minute The U.S. Federal Reserve’s most recent monetary policy meeting showed that “many” policymakers believe that if inflation, currently at a 40-year high, remains high, one or more half-point hikes are appropriate. The market is pricing in a federal funds rate of 2.6% through December, compared to 0.25% to 0.5% currently.

The European Central Bank also is widely concerned It may turn more hawkish after the euro zone’s annual consumer price rise hit a record 7.5% in March.

World food prices rose by a record 34% in the year to March, United Nations data show. Inflation not only reinforces the central bank’s determination to raise the cost of borrowing for businesses and households, but also erodes the real returns paid by fixed-income bonds.

“Investors have a lot going on right now,” said Maria Municchi, M&G’s multi-asset portfolio manager.

“The main question is whether we will see a global recession in the next 12 months,” she added. “Are rates going to go up pretty high and then have some consequences? [economic] grow? “

Elsewhere in the stock market, the Stoxx Europe 600 rose 0.8%, boosted by bank shares seen as beneficiaries of higher interest rates. France’s CAC 40 rose 0.9% as some analysts warned traders were not fully quantifying Emmanuel Macron’s loss to far-right candidate Marine Le Pen in this month’s presidential election Le Pen) risk.

“It’s probably a concern that’s not really accounted for right now,” said Antoine Lesne, head of business research and strategy for State Street’s SPDR ETFs.

Exit polls Show Macron’s lead over his rivals is much smaller than it was five years ago.

In Asia, the Hang Seng Technology Index, which tracks Hong Kong-listed technology companies, fell sharply, closing down 1.1%.

Brent crude, the oil benchmark, rose 0.4% to $101 a barrel.