The dollar index rose to a two-week high on Monday, while bond yields jumped to their highest since June and global stocks sold off after senior Federal Reserve officials indicated a U.S. interest rate increase was on the cards in the near term. The Fed effect – and the stronger dollar – reverberated through markets, pressuring stocks in Europe and emerging markets, pushing oil below $47 and the commodity complex lower.

In the past few months, the Fed has been swaying back and forth on whether to raise rates this year, keeping investors across the globe on tenterhooks. But on Friday, at the Fed’s annual gathering for global central bankers in Jackson Hole, Wyoming, Fed Chair Janet Yellen gave one of the clearest indications that a rate hike was probably round the corner, Reuters reported.

As Bloomberg reports, stocks and currencies in developing economies sank to their lowest levels in at least three weeks after Federal Reserve officials once again spurred bets on a U.S. interest-rate increase in September. The Bloomberg Dollar Spot Index extended its biggest jump since June, while oil led declines in commodities. Japan’s Topix index of shares rose after central bank chief Haruhiko Kuroda reiterated a pledge to boost monetary stimulus if needed.

With hardly any rate hikes expected in 2016 just a few months ago, the prospect of a rate increase next month is now back on the table, with the probability rising to 42% from 22% in the space of a week. December rate hike odds jumped to 65% after opening at 57% on Friday morning before Jackson Hole and Yellen and Fischer’s comments.

Fed Chair Janet Yellen said Friday in Jackson Hole the case for an increase is getting stronger, while Vice Chairman Stanley Fischer indicated a tightening is possible at the next review. Those comments will sharpen the focus on U.S. data this week including consumer spending Monday and the monthly payrolls report Friday to gauge whether the economy is strong enough to sustain higher borrowing costs.

“Fischer confirmed the broad view on the Fed Open Market Committee that the economy has strengthened of late and that interest rates should be raised gradually; possibly again next month if this week’s employment report supports a rate rise,” said Stewart Richardson, chief investment officer at RMG Wealth Management.

“Declines today have a lot to do with the aftermath of Jackson Hole,” said Samy Chaar of Lombard Odier. “If they manage to raise rates that will be relatively good news but it does entail a little bit more tightening in the system.”

Oil dropped not only on the back of a stronger dollar, but amid newly rising doubts producers will agree on deal to stabilize market when suppliers meet next month for informal talks. As we reported on Friday, Iran’s plan to continue boosting crude output until it regains pre-sanctions OPEC market share is dimming prospects of collective action, according to Patrick Allman-Ward, CEO of Dana Gas. “The likelihood of them actually agreeing to some kind of production freeze is relatively low,” Daniel Hynes, senior commodity strategist at ANZ Bank says in Bloomberg TV interview. “It’s certainly been so far a successful jawboning exercise.”

In equities, Asian stocks outside Japan fell after Fed’s Yellen said the case for raising interest rates is getting stronger; shares in Tokyo rallied as the yen weakened and the Bank of Japan’s governor vowed to add stimulus if needed “There will be some mild pressure on markets,” Michael McCarthy, chief market strategist in Sydney at CMC Markets, said by phone. “The Fed remains very much data dependent, and that gives you the next hurdle for global markets which is the U.S. non-farm payrolls on Friday. That now becomes crucial to the near-term direction of markets” 8 out of 10 sectors decline with consumer staples, utilities underperforming and consumer discretionary outperforming. Japan’s Nikkei bucked the trend in Asia, closing 2.3 percent higher, the biggest one-day gain in three weeks, as the yen weakened against the resurgent dollar.

In Europe, the Stoxx Europe 600 Index retreated 0.5 percent in early trading, down for the second session in three. A gauge of auto makers posted the biggest decline, while sliding oil prices dragged energy producers lower. The volume of shares changing hands today was 66 percent lower than the 30-day average as U.K. markets closed for a holiday. European equities have oscillated between weekly gains and losses all month, with the Stoxx 600 trading in a tight range and struggling to find a direction after a rebound of as much as 12 percent following the aftermath of Britain’s secession vote.

“Declines today have a lot to do with the aftermath of Jackson Hole and raised expectations of a rate hike this year, so that leads to a bit of adjustment in the market,” said Samy Chaar, a Geneva-based strategist at Lombard Odier, which manages about $170b. “If they manage to raise rates, that will be relatively good news but it does entail a little bit more tightening in the system.”

The dollar rose 0.5 percent to a three-week high of 102.39. That followed gains of 1.3 percent on Friday, its biggest one-day advance in almost seven weeks. The dollar index was up at 95.724 its highest in two weeks. Japanese stocks advanced as a weaker yen boosted the outlook for exporters. The Topix index climbed 2 percent as Toyota Motor Corp. and Mazda Motor Corp. jumped at least 4 percent.

Germany’s benchmark 10-year bund yield increased as much as four basis points to minus 0.035 percent, before being one basis point higher at minus 0.062 percent. The yield on similar-maturity French bonds was one basis point higher at 0.18 percent, having jumped earlier by four basis points. Euro-area bonds are also coming under pressure with Spain’s acting Prime Minister Mariano Rajoy set to face a confidence vote Tuesday, and governments set to reissue debt after a summer lull that saw Germany the sole issuer last week. Countries in the region may sell about €30 billion this week, according to Commerzbank AG.