"We could easily get a scenario where the Fed will basically have to reverse course and begin to stay on hold," Apollo's Torsten Sløk said.

Bonds markets are reeling from the risk that the Fed won’t cut interest rates as much as expected. The 10-year Treasury yield rose above 4.2% for the first time since July, setting off a surge in borrowing costs from Australia to Germany.

Bonds are falling around the world as investors mull the prospect of slower US interest-rate cuts, a trend that risks upending debt positions everywhere.Most Read from BloombergClimate Change Is Killi