Global markets whipsawed Thursday as investors scrambled to reassess their options a day after the head of the European Central Bank said markets should get used to volatility.

The yield on the benchmark German 10-year bond touched 0.99%, its highest level since September, before erasing the day’s rise and falling back to 0.84%. The 10-year U.S. Treasury yield, which hit a fresh 2015 high of 2.42% earlier Thursday, recently fell back to 2.33%. Yields rise as prices fall.

In the U.S., stocks opened broadly lower and fluctuated in early trading before deepening losses. The Dow Jones Industrial Average was recently down 94 points, or 0.5%, at 17983.

In China, the Shanghai Composite Index suffered one of its biggest falls this year before staging a dramatic recovery to end in positive territory.

“Volatility over the last days has been breathtaking, especially in bond markets,” said Wouter Sturkenboom, senior investment strategist at Russell Investments. “It’s causing all kinds of distortions in equity and currency markets as well.”

Philip Lawlor, a partner at London-based Smith & Williamson Investment Management LLP, said ECB President Mario Draghi had “injected a huge amount of uncertainty into markets and that is still having a major impact.”

After announcing that the ECB had decided to keep interest rates on hold at record lows Wednesday, Mr. Draghi said markets should get used to periods of volatility, which he said won’t affect monetary policy decisions.

“This could well have played a role in the selloff. However, we would say that the size of the move was once again exaggerated by thin market liquidity, a recurring theme, and the selling momentum from the day before,” Rabobank economist Elwin de Groot said.

In a liquid market, there are many players ready to step in when prices move. They act as a sort of shock absorber, smoothing out the sharp swings that might result if jittery sellers can’t find buyers or eager buyers can’t find sellers.

Investors said a selloff in Asian bond markets was kicked off by Wednesday’s sharp moves in Europe after Mr. Draghi’s comments, but they struggled to explain the magnitude, with many citing a liquidity crunch. Singapore’s 10-year bond yield surged to its highest level in almost two years.

Mr. Draghi also said Wednesday that ECB economists now expect consumer prices to rise 0.3% this year, having previously projected they would be unchanged. Rising inflation threatens to erode the value of bonds over time.

Christoph Rieger, a strategist at Commerzbank, said a “perfect storm” for yields could be created from rising inflation, a resolution in Greece, the U.S. economy recovering swiftly and the ECB not being “bothered by higher volatility.”

Equity investors–unnerved by the scale of the moves in bond markets–yanked their money out of stocks on Thursday. The Stoxx Europe 600 pared losses in the European afternoon and closed 0.8% lower.

“Markets have been all about central banks for some time now and monetary policy has moved both bonds and stocks sharply higher over the last year,” said Paul Brain, head of fixed income at Newton Investment Management, which looks after around $79 billion in assets.

“When one asset class is dealt a shock it’s not surprising to see the other track it lower,” he added.

In currency markets, the euro hit more than two-week high against the dollar before falling back to $1.125, largely flat against the buck on the day.

Investors have also been jittery about Greece this week, as the country and its international creditors try to hammer out a financing deal. Greek Prime Minister Alexis Tsipras and his country’s creditors were able to agree on some aspects of a deal at a meeting Wednesday night, but differences remain on some key issues, European officials said Thursday.