Investors have abandoned risk assets and fled to safe havens following disappointing US data that stoked fears of a global growth slowdown.
Equity markets and government bond yields across the US, UK and Europe have plummeted this afternoon, continuing the dramatic rotation away from risk assets seen so far in October.
The latest spark was US consumer spending data, which showed a 0.3 per cent drop in retail sales in September, lower than the 0.1 per cent drop predicted by economists.
In response the FTSE 100 index, which was already trading lower even before the US data, sold off sharply and is currently down 2 per cent today.
The US S&P 500 and Dow Jones Industrial Average indices have both opened sharply lower, while equity markets are down throughout Europe.
UK and US 10-year government bond yields have fallen below 2 per cent for the first time since the first half of 2013 as investors rush to buy the bonds as a safe haven asset.
Bond yields in both countries are now more than a third lower than they were at the end of 2013, when both 10-year bonds yielded more than 3 per cent.
