On Tuesday, Asian stock markets sank and the dollar surged as investors fretted about increasing interest rates and an escalation in the Ukraine crisis, while Treasury yields soared as an unsettling fall in British gilts rippled through global bond markets.

MSCI’s broadest index of Asia-Pacific equities outside Japan sank 1.7% to a two-year low, led by a sharp drop in chipmakers and China tech firms in response to U.S. export limitations aimed at stifling Chinese technological progress.

Japan’s Nikkei dropped 2%. The risk-sensitive Australian and New Zealand dollars hit 2-1/2 year lows.

“Risk aversion has dominated,” said National Australia Bank currency strategist Rodrigo Catril, with renewed Russian attacks on Ukrainian cities and global recession fears worrying markets.

“Sentiment has also not been helped by a big core global bond sell off led by UK gilts, notwithstanding a flurry of announcements designed to calm UK debt markets,” he added.

Treasury yields jumped when trading resumed after Monday’s U.S. holiday, with 30-year yields up 11 basis points to an almost nine-year high of 3.956%.

Bonds globally have been sideswiped by the rout in gilts, amid fears pension funds were forced into fire sales and British promises of more tax details and extra emergency measures from the Bank of England have done little to stem the selling.

The backdrop, meanwhile, is of ever higher interest rates and nerves are fraying ahead of Thursday’s release of U.S. inflation data which could set the stage for another big hike from the Federal Reserve in November.