Fed Policy Transmission — A rate hike raises the discount rate used to value future cash flows, which compresses equity valuations (especially long-duration growth stocks whose profits are furthest in the future) and pushes bond yields up while bond prices fall — the same mechanism, playing out across two asset classes at once.

Dollar Dynamics — Higher U.S. rates relative to other countries tend to strengthen the dollar (capital flows to the higher yield), which pressures emerging-market borrowers with dollar-denominated debt and squeezes U.S. multinationals' overseas earnings when translated back to dollars.

Stagflation Fears — The worst quadrant for both stocks and bonds simultaneously — slowing growth removes the earnings case for equities while persistent inflation keeps the central bank from cutting rates to support them, leaving few traditional assets to hide in besides cash and select commodities.

Carry-Trade Unwinds — When investors borrow cheaply in a low-rate currency to fund higher-yielding assets elsewhere, a sudden rate move in the funding currency can force a rapid, correlated unwind across seemingly unrelated markets — a reminder that leverage embedded in currency markets can transmit shocks globally within days.