Opening Bell: NASDAQ Leads U.S. Futures Selloff As Market Ignores Fed Promises

  • US futures buck the global bullish trend
  • Yields reach highest level since January 2020

Key Events

 futures led in a selloff in trading on Thursday with futures for both the and also lower as a resumption of the Treasury selloff suggests the markets’ faith in the Federal Reserve might be eroding. Futures on the were only marginally in the green. 

The dollar and gold were higher.

Global Financial Affairs

Yields on the Treasury note shot past 1.7%, and were a hair away from the 1.75% level last seen on Jan. 22, 2020, as the ascending triangle pattern predicted.

10-year Treasuries Daily

Contracts on the tech-heavy NASDAQ 100—which benefited the most from lockdowns, pushing their valuations to dotcom proportions—were 1.3% lower at the time of writing, almost double that of small caps listed on the Russell 2000.

Sure, the current selloff may be temporary profit-taking after the Federal Reserve its willingness to continue supporting the economy, as well as prop up equities at all-time highs against the growing angst of rising and the higher rates expected to follow.

However, we do not think so. When such meaningful policies have been announced before, stocks climbed for more than one day. When OPEC it was keeping production cuts in place, surged 8.4% over three straight days, before profit-taking. To clarify, the trading of one morning does not establish a trend, and this could just be noise. It is telling however, that it is taking place just one day after the Fed gave the store away. 

The Fed said it would maintain its ultra-accommodative policy—it plans to keep rates near-zero until 2023, continue buying assets with no plans to taper QE and provide incredibly loose forward guidance. It is also not concerned about inflation, saying it is transitory. But at the same time it increased its forecast from 1.8% to 2.2%. Is that short-lived?

The Fed said it does not want to act pre-emptively, just based on forecasts. So the same Fed that published its dot-plot—its forecast on interest rates—is telling the market that it does not want to act based on forecasts. Oh, and while the Fed is claiming that the PCE forecast is temporary, it forecast that GDP will surge to 6.5% from 4.2%.

Perhaps the reason for today’s sell-off is that traders who were betting that the Fed’s continuous, unflinching support would stimulate the economy to grow faster were starting to acknowledge some of the multiple inconsistencies in the messaging. 

Because, as we see it, we could expect one of the following two developments:

  1. the Fed breaks an oft-repeated promise of not raising rates and tapering bond purchases, or
  2. keeps its promise but lets the economy run off a cliff.

Unless inflation fails to increase, it’s one or the other. As of now, the continued Treasury selloff demonstrates that investors are readjusting positions to adapt to one or the other, if not both.

In Europe, the Index rose with carmakers and banks, which are expected to rise amid the shift from growth to value.

Japan’s closed at over 2000 for the first time since 1991.

In yesterday’s trading, US stocks climbed to record highs as long-maturity yields fell back from highs of over a year, after the Fed reiterated its same message.

The rebounded. 

Dollar Index Daily

Dollar Index Daily

The greenback’s recovery was from what may be the bottom of a falling flag, whose position makes sense, as the price struggles to complete a double bottom born from a falling wedge since the March peak.

jumped but found resistance by the top of a rising flag—bearish after the preceding 7.8% plunge.

Gold Daily

If the flag completes, with a downside breakout, it could indicate that the yellow metal will begin a steeper decline, along the red channel.

edged lower after a two-day advance.

, which has an with the dollar, also slid.

Oil Daily

The liquid gold may be trading within a falling flag, as the price corrects within a rising channel.

Up Ahead

  • On Friday, Canada releases its figures. 
  • The Bank of Japan announces its monetary policy and Governor Haruhiko Kuroda holds a briefing on Friday.

Market Moves


  • Futures on the S&P 500 Index declined 0.3%.
  • The STOXX 600 Index climbed 0.2%.
  • The Index rose 0.8%.
  • The Index gained 0.6%.


  • The Dollar Index rose 0.25%.
  • The fell 0.2% to $1.1953.
  • The was little changed at $1.3963.
  • The was little changed at 6.503 per dollar.
  • The weakened 0.3% to 109.14 per dollar.


  • The yield on 10-year Treasuries climbed 15 basis points to 1.72%.
  • The yield on Treasuries climbed one basis point to 0.14%.
  • Germany’s yield gained two basis points to -0.27%.
  • Japan’s yield increased one basis point to 0.114%.
  • Britain’s yield rose four basis points to 0.869%.


  • West Texas Intermediate crude dipped 1.1% to $63.89 a barrel.
  • declined 1.2% to $67.20 a barrel.
  • Gold weakened 0.4% to $1,737.78 an ounce.
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