Sticky inflation, political drama, and sky-high government debt continued to rattle markets last week, sparking a bond selloff that sent yields surging. US Treasury yields popped to near 5%, and UK and Japanese yields hit highs not seen in at least a decade. Although these higher yields hint at economic resilience, they’re no picnic for stocks. Higher interest rates tend to slow the economy, shrink the value of future profits, and make cash accounts more appealing than stocks and they reflect real uncertainties on the outlook for inflation and interest rates. More worrying, stocks have historically suffered their biggest setbacks when long-term yields have risen faster than shorter-term ones – as has been the case lately. It’s no wonder Wall Street’s “fear gauge” jumped to elevated levels again.

Bitcoin slipped back below $100,000, reminding everyone just how closely it tracks stock vibes and easy money. Like tech shares, bitcoin rocketed after the Federal Reserve (Fed) hinted it was done hiking rates, sparking a sharp drop in borrowing costs and a boisterous rush into riskier assets. But last week’s jump in bond yields flipped the script: fearful sentiment and plumper returns on safer bets made bitcoin less tempting, prompting some investors to lock in profits. It was a timely reminder that bitcoin often behaves less like “digital gold” and more like a high-beta tech stock, amplifying the market’s swings and offering a litmus test for how much of a gamble investors are willing to take.

In some ways, the US economy’s not doing just fine, it’s thriving. The latest monthly job report revealed stronger-than-expected hiring and a dip in the unemployment rate, blunting talk (at least for now) about a coming recession. That marked the 48th straight month of job growth in the US, tying for the second-longest streak in history. It wasn’t just those 256,000 new jobs and the new 4.1% unemployment rate turning heads last week: a key gauge of US services industry activity hinted that the heavyweight economic sector is likely to continue its steady expansion. Plus, data from earlier in the week showed 8.1 million job openings in November, proving demand for workers is still resilient. Stocks initially plunged Friday after the stellar jobs report, as the strength of the job market dashed hopes for further interest rate cuts from the Fed. That’s a pointed reminder that good news for the economy isn’t always good news for markets.

China rolled out yet another round of economic stimulus last week, aimed at getting its consumers spending again. The latest measures included new subsidies on home appliances and electronics and an extension of trade-in incentives for electric and hybrid car purchases. The government’s cautious, step-by-step approach marks a departure from its previous, debt-driven growth tactics, and some worry it won’t be enough to stave off a deeper crisis. Weak consumer confidence, a property crisis, and sluggish business activity are dragging prices down and spooking would-be investors. There’s a major fear factor at play too: the potential for a Japan-style “balance sheet recession,” where businesses prioritise paying off debt over spending, potentially locking China into years of weak growth and deflation.