U.S. Treasury prices fell sharply on Monday, a bearish start to 2022 following the worst year for the global bond market in more than two decades.

The benchmark 10-year Treasury yield jumped 0.11 percentage point to exceed 1.6% for the first time since the emergence of the highly transmissible strain of coronavirus Omicron in late November. A survey of the U.S. manufacturing sector, due for release on Tuesday, as well as the monthly jobs report on Friday, will provide clues as to whether investors should anticipate at least three Federal Reserve rate hikes this year. .

In equities, the S&P 500 gained 0.3% by mid-morning. The US benchmark had opened 0.6% more, helped by the explosion in Tesla’s production figures, only to reduce the lead following a sharp drop in the price of US government debt.

The European Stoxx 600 index gained 0.4%, hitting an intraday record in light volume. The German Dax rose 0.8 percent while the Cac 40 in Paris rose 1 percent. The yield on German 10-year government bonds gained 0.05 percentage point to minus 0.13 percent. Stock exchanges in London, Japan and mainland China were closed for holidays.

Monday’s market moves followed the worst year for global bonds since 1999 after central banks signaled they were ready to fight inflationary pressures with interest rate hikes. The withdrawal of the stimulus that fueled a global economic recovery has so far had a modest effect on equity markets, with the S&P 500 last year gaining 27% and the Stoxx 600 22%.

“With speculative spirits high, investors will need to assess return per unit of risk as volatility reappears,” said Sean Darby, analyst at Jefferies. “Perhaps equity investors should be more concerned that policymakers get stuck trying to control inflation with higher rates without disrupting asset markets.”

Tesla jumped 10% on Monday after the automaker negotiated a supply chain disruption to report beating deliveries for the fourth quarter.

Competing automakers won in response, with Volkswagen and BMW increasing by more than 2% in Europe. Lufthansa drove travel inventories higher after Citigroup added the airline to its shopping list amid optimism that demand for long-haul flights will revive.

Investors started the year with several risks in the background, said Karl Steiner, strategist at Swedish bank SEB. Evergrande’s notice on Monday that he would suspend his actions in Hong Kong again created “a bit of uncertainty,” Steiner added.

The real estate developer has been at the center of a sector crisis in the world’s largest emerging markets for months. Hong Kong’s Hang Seng stock index fell 0.5% on Monday, as the property development sector fell 1.1%.

Growing tensions between Western countries and Russia have also caught the attention of investors, with US President Joe Biden warning his country will act “decisively” if Russia invades Ukraine.

Oil prices have fluctuated on both sides of the Atlantic ahead of an OPEC meeting on Tuesday to discuss increased production. Brent crude, the international benchmark, climbed 1.3% to $ 78.85 a barrel, after rising 1.5% earlier according to reports that Libyan production was strangled by a damaged pipeline.