Global turmoil has been acute this year, and a 5.4 percent decline in Japanese stocks and Japan's 10-year bond yield going negative Tuesday drove more concern across financial markets.
But Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi, said world market downturns are not justified by economic fundamentals and should not stall Federal Reserve tightening in the United States.
"It's not enough financial market turmoil for the Fed to pause, unless it's giving a signal that the U.S. economy is going to turn down in the future," Rupkey told CNBC's "Worldwide Exchange" on Tuesday. The world will be looking for clues in Fed Chair Janet Yellen's congressional testimony on economic conditions on Wednesday and Thursday.
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So far in 2016, the Dow Jones industrial average was down 8 percent as of Monday's close, with the off 9 percent and the Nasdaq composite down more than 14 percent.
Still, Rupkey said there's plenty of room for markets to tumble before this affects the broader economy. "I would think down 15 [or] 20 percent and sit down there, it has to be a serious decline. The Nasdaq has its own special issues, I don't know if that's the broader markets."
Jobs growth, he said, is the time-honored signal of a strong economy — pointing out that U.S.-style quantitative easing in the euro zone continues because of double-digit unemployment. But Japan's shift to negative interest rates last week seemed out of line with jobs.
"I don't understand it, all of these central banks are very different," Rupkey said. "Japan's unemployment rate is down at 3 percent. Everyone has a job, unemployment's very low there."
He cautioned about bringing negative rates to the United States. "I think it would scare the American public, it's a very unsound policy to even talk about that."
Without market confidence, these moves by central banks are toothless, according to CNBC "Fast Money" trader Guy Adami.
"They're pulling all the different levers," Adami said in a separate "Worldwide Exchange" interview. "When central banks have lost control, market confidence erodes. I think that's what you've found now."
Adami said the European banking sector, down more than 25 percent this year, has been leading U.S. markets down this week. Shares of Deutsche Bank for example, fell nearly 10 percent Monday.
"It may be systemic. I'm not sure but clearly something's going on with Deutsche Bank, you're talking about a bank with probably the largest derivative book in the history of the world," Adami said. "There are some concerns."
Deutsche Bank co-CEO John Cryan rushed Tuesday to reassure investors and staff on the bank's stability. The stock was down another 3 percent midmorning Tuesday.
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European monetary policy could complicate things for companies like Deutsche Bank, according to Rupkey.
"In Europe where bond yields are down to very, very low levels, maybe these banks can't produce the income that they used to," he said. "That's not the case in the U.S. yet."
Despite the turmoil this year, the odds of a U.S. recession are low, Rupkey said. "It terrified people, it sent some shares going down in panic sales but I think we're going to stabilize here."