Ben Bernanke's confidence in the US economy did not kill the worm of doubt that has been gnawing at markets. Investors sold off stocks and bonds after the chairman of the Federal Reserve spoke about improvements in the US economy that could allow the central bank to step back from its monetary stimulus.
Markets have been sold off before and quickly recovered as they digested Dr Bernanke's words. But the steep decline this time around underscored widespread fears.
One is that the economy is not strong enough to do without the Fed's support.
Another is that the Fed's decision to ease off the gas could, in itself, cause enough turmoil in the markets that economic growth could be threatened.
"There is a tremendous amount of doubt whether without Bernanke's help, the economy can keep chugging along," said Thomas di Galoma, head of bond trading at ED&F Man Capital Markets.
The breadth of the anxiety was evident across bond markets. Investors did not just sell the longer-dated government bonds that the Fed has been buying; they also sold shorter maturities, pointing to predictions that interest rates are likely to rise. The interest rate on the benchmark 10-year Treasury note climbed to 2.36 per cent from 2.19 per cent, the sharpest increase this month.
Strategists said investors were panicking and overlooking the nuances of Dr Bernanke's words. He emphasised the Fed was not likely to pull back on the stimulus until it was clear the economy could handle it and could step right back in if there were signs of faltering.
"Nobody is listening," said Gennadiy Goldberg, a rates strategist at TD Securities. "As soon as you give the market anything to chew on, they are going to tear the limb off."
Dr Bernanke said it would ultimately be healthy for interest rates to rise from the unnaturally low levels of the past few years. "If interest rates go up for the right reasons - that is, both optimism about the economy and an accurate assessment of monetary policy - that's a good thing."