Charting the Markets: Global Stocks Approach Bear Market

The rout in risky assets continues. Global stocks have slumped 3.5 percent in the past three days, leaving the MSCI All Country World Index a little over 1 percent from a bear market. Investors are fleeing to developed market government bonds with the yield on the Bank of America Merrill Lynch World Sovereign Bond Index tumbling to 1.29 percent, the lowest since records began in 2005. European stocks fluctuated between losses and gains after Deutsche Bank reassured investors and employees that it has enough funds to pay coupons on its riskiest debt.

Japan's Nikkei 225 Index sank the most since June 2013 as the rising yen hurt shares of exporters like automakers Toyota, Nissan and Mazda. The yen rose to the highest against the dollar since November 2014, consolidating its position as the best performing major currency in 2016. It seems central banks have, at least for the moment, lost the ability to weaken their currencies through looser policy. Since the Bank of Japan introduced negative interest rates for the first time on Jan.29, the yen has risen 3 percent against the dollar. The Nikkei 225 Index has slumped 8 percent in that time. The BoJ move - coupled with global risk aversion - pushed the yield on the nation's benchmark 10-year bond below zero today for the first time. The Nikkei has plummeted 15 percent in 2016 and entered a bear market in January.