Stocks and oil prices dipped on Thursday after weak U.S. consumer data rekindled global recession worries, while Japan’s yen reared up again as traders took fresh punts that the Bank of Japan will soon be tightening policy.

An early 0.5% slide in Europe (.STOXX) after a bad day for the Nikkei (.N225) meant the all-world share indexes (.MIWD00000PUS) were facing their first three-day losing streak of the year.

“We actually think that the recession and the corporate earnings season that we are just at the start of … are going to weigh on the markets,” Close Brothers Asset Management Chief Investment Officer Robert Alster said.

“The retail sales data from the U.S. and places like the UK are going to be a bit weak for a while,” he added. “But never ever underestimate the U.S. consumer, that is an import investment rule. Let’s see a few more months (of data).”

In the currency markets, the yen rose 0.7% to 127.95 per dollar, unwinding some of its drop the previous day when, to the surprise of markets, the Bank of Japan (BOJ) stuck firmly to its approach of ultra-low interest rates.

The BOJ has pursued super-easy policy settings for decades in an attempt to generate inflation and growth, but there are doubts it can keep that up, and traders have been selling Japanese government bonds and buying yen to bet on a shift.

“There’s an intense amount of speculation in the market that now that the January (BOJ) meeting has happened without any changes … that we’ll see something in March,” said Shafali Sachdev, head of FX, fixed income and commodities in Asia at BNP Paribas Wealth Management in Singapore.

April was another possibility, she added, since by then the BOJ would have a new governor. “My guess would be that more speculators would look to build positions going into these meetings.”

Speculators did, however, give some respite to the BOJ in the bond market. After four days of huge BOJ spending to reel 10-year yields back inside the target band of 0.5% either side of zero, the yield held at 0.41% on Thursday.

RECESSION RISK

In Europe, there was plenty going on too.

European Central Bank president Christine Lagarde is due to speak at 1030 GMT at the World Economic Forum in Davos, and minutes from last month’s ECB meeting are due later in the day.

Meanwhile Dutch ECB policymaker Klaas Knot, a noted hawk, was already out saying markets should take more seriously its guidance of rates rising in multiples of 50 basis points.

Norway’s crown ticked higher as its central bank kept its interest rates at 2.75% as widely expected, but said they were likely to go up in March.

On Wednesday, the S&P 500 (.SPX) had lost 1.6% after data showed U.S. manufacturing output had slumped last month and retail sales had fallen by the most in a year.

S&P 500 futures were down 0.2%-0.3% in European trading and close to breaking below the 50-day moving average.

“The decline in retail spending and industrial production adds to the theme of the economy slowing and heading into recession in 2023, and pushes back on the soft-landing narrative dominating markets since January,” said National Australia Bank’s head of market economics, Tapas Strickland.

Microsoft’s announcement of 10,000 layoffs and hawkish comments from Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard added to the gloom, with both monetary officials expecting U.S. interest rates above 5% this year.

Fed officials Lael Brainard and John Williams are next due to make public appearances.

The U.S. dollar wound back London-trade losses in the New York session and made gains in Asia. The Australian dollar was down 0.75% at $0.688, losing ground after data showed an unexpected fall in Australian employment last month.

The euro was under gentle pressure at $1.081, and the New Zealand dollar took news of Prime Minister Jacinda Ardern’s surprise resignation largely in its stride, but was pressured by broader U.S. dollar buying to last sit 1% lower.