Equity benchmarks in Japan, South Korea and Australia were all in the red, while stock futures for Hong Kong slipped. Contracts for US shares declined in Asian trading after the S&P 500 erased earlier gains and fell more than 1% in a volatile session.

Treasuries steadied after bond yields jumped to new year-to-date highs on stronger-than-expected retail sales data. Oil edged higher as traders weighed Middle East tensions.

“Stocks began to violate uptrends and pull back,” said Craig Johnson at Piper Sandler. “Interest rates are expected to stay higher for longer. A more cautious and tactical approach is favored as earnings season gets underway.”

Investors will now turn their focus to China’s torrent of economic indicators Tuesday, including gross domestic product, retail sales and industrial production.

Elsewhere, the Japanese yen remained under pressure, having weakened overnight versus the dollar. Traders are on alert for any further declines and the increasing risk that authorities in Tokyo may intervene in the market to stem the drop.

“There are signs of some stress emerging in FX markets due to the strong dollar, the most conspicuous being the fall in the yen to another 34-year low,” said Kyle Rodda, senior market analyst at Capital.Com Inc. “It’s likely Japan’s Ministry of Finance will jawbone further if for no other reason, to lean against potential disorderliness in the yen,” he said.

Fear gauge

Volatility perked up, with the premium for one-month put options to protect against a pullback in US equities hitting the highest since October. Wall Street’s “fear gauge” — the VIX — hit levels unseen this year. The S&P 500 broke below 5,100, dropping to the lowest in almost two months. The tech-heavy Nasdaq 100 slid over 1.5%. Both gauges breached their 50-day moving averages — seen as a bearish signal by several chartists. Banks outperformed on a surprise profit from Goldman Sachs Group Inc.

Treasury 10-year yields spiked on Monday, while those on two-year notes came close to 5%. Bonds were also under pressure as JPMorgan Chase & Co. and Wells Fargo & Co. tapped the US high-grade bond market, the first in a likely parade of bond sales from banks after results.

US retail sales rose by more than forecast in March and the prior month was revised higher, showcasing resilient consumer demand that keeps fueling a surprisingly strong economy. As long as a robust labor market supports household demand, there’s a risk that inflation will become entrenched.

“If the S&P 500 is going to avoid its first three-week losing streak since last September, investors will need to move past concerns that rate cuts will be delayed because of sticky inflation,” said Chris Larkin at E*Trade from Morgan Stanley. “In the near-term, that could come down to the tone set by the first full week of earnings season, but geopolitical tensions in the Middle East remain a wild card.”

In commodities, West Texas Intermediate reclaimed its $85 mark on Monday — after briefly falling below it — and edged higher Tuesday in Asia. Top Israeli military officials reiterated the country has no choice but to answer Iran’s weekend attack. Gold was steady in early trading.

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