"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

While the Federal Reserve has projected more interest rate cuts this year, some officials are cautious as more economic data on inflation and employment comes in.

Four Federal Reserve policymakers on Monday expressed support for further interest-rate cuts, but appeared to differ on how fast or far they believe any cuts should go.

Four policymakers agree the central bank should make further rate cuts, though some support a slower, smaller set of reductions.