What the world's two most-powerful central banks showed Thursday was that they are powerless in dealing with a bug. That's bad news for global markets, and China is no exception.

Literally, there was no place to hide. Gold sold off, along with stocks, credit and oil, for a second day.

European stocks tumbled the most on record and U.S. investment-grade bond funds suffered unprecedented outflows.

It happened even as the ECB boosted its QE and liquidity tools, while the Fed resumed its own asset purchase programs.

What's more worrying is that the stress is emerging in dollar funding markets as banks and investors scramble for the U.S. currency to hunker down. You can see the dollar hoarding in the widening cross-currency basis swap, and falling CNH forwards.