World stocks and oil prices fell on Monday as fresh COVID-19 restrictions in China exacerbated worries about the global economic outlook.

The safe-haven dollar rallied, while the U.S. Treasury yield curve remained deeply inverted in a sign that investors remain alert to global recession risks.

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Beijing’s most populous district urged residents to stay at home on Monday as the city’s COVID case numbers rose, while at least one district in Guangzhou was locked down for five days.

This sent major European bourses downhill, with markets in London, Frankfurt and Paris all opening weaker, while S&P 500 futures and Nasdaq futures slipped 0.5%.

MSCI’s broadest index of world shares fell 0.5%.

The U.S. Thanksgiving holiday on Thursday combined with the distraction of the soccer World Cup could make for thin trading, while Black Friday sales will offer an insight into how consumers are faring and the outlook for retail stocks.

A risk-off feeling kicks off the week, Fiona Cincotta, a senior markets analyst at City Index in London, said.

“There is demand for safe havens like the dollar and riskier assets are on the back foot,” she added.

“The other thing to bear in mind is that we have a had a strong rally, so there is a feeling of need to take stock of where we are.”

The dollar was up 0.9% against Japan’s yen at 141.67, its highest since Nov. 11. The pound and the euro both fell by 0.8% each, edging off from last week’s 18-week highs.

China’s yuan eased to a 10-day low against the dollar on Monday, as worsening COVID-19 infection numbers and fresh mobility restrictions dented market sentiment.

PRICED FOR RECESSION

Atlanta Federal Reserve President Raphael Bostic on Saturday said he was ready to step down to a half-point interest rate hike in December but also underlined that rates would likely stay high for longer than markets expect.

Bond markets suspect the Fed will tighten policy too far and tip the economy into recession. The Treasury yield curve, measured by the gap between two and 10-year bond yields, is at around -70 basis points (bps) and nearing the level last seen in 2000. Two-year Treasury yields were last up 3 bps on the day at 4.53%, while 10-year yields were 2 bps higher at 3.84%.

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There are at least four Fed officials scheduled to speak this week, ahead of a speech by Chair Jerome Powell on Nov. 30 that will define the outlook for rates at the December policy meeting.

Central banks in Sweden and New Zealand are expected to hike rates this week, perhaps by 75 bps.

The Fed chorus has helped the dollar stabilise after its recent sharp sell-off, though speculative positioning in futures has turned net short on the currency for the first time since mid-2021.

“Given how far U.S. bond yields and the dollar have dropped in the past couple of weeks, we think there is a good chance that they rebound if the Fed minutes are in line with the recent hawkish language from members,” said Jonas Goltermann, a senior markets economist at Capital Economics.

Meanwhile, turmoil in cryptocurrencies continued with the FTX exchange, which has filed for U.S. bankruptcy court protection, saying it owes its 50 biggest creditors nearly $3.1 billion.

In commodity markets, gold slipped 0.7% to $1,737 an ounce , after dipping 1.2% last week.

Oil futures failed to find a floor after last week’s drubbing that saw Brent crude tumble almost 9%.

Brent was last down 1% to $86.71, while U.S. crude futures lost 0.5% to $79.71 per barrel.