STOCK MARKET OUTLOOK: NASDAQ SINKS AS TEN-YEAR TREASURY YIELD TOPS 1.65%Nasdaq extends its selloff as tech shares slide additional resulting from
STOCK MARKET OUTLOOK: NASDAQ SINKS AS TEN-YEAR TREASURY YIELD TOPS 1.65%
- Nasdaq extends its selloff as tech shares slide additional resulting from surging bond yields
- The ten-year Treasury yield has climbed over 20-basis factors from Friday’s backside
- Fed taper timeline may very well be pulled ahead with inflation trying not-so transitory
The Nasdaq and different main inventory indices are buying and selling deep within the crimson on Wednesday. This follows a pointy transfer greater by Treasury bond yields and the US Greenback this morning in response to red-hot inflation information. Notably higher-than-expected readings for each headline and core CPI have stoked investor issues that the Federal Reserve could must deliver ahead its taper timeline.
Even FOMC Vice-Chair Richard Clarida famous how he was stunned by the energy of at the moment’s CPI report. Fears of sticky inflation weren’t felt in at the moment’s stable ten-year Treasury public sale outcomes, nonetheless, as yields at 1.68% attracted consumers. That alleviated upward strain on yields and helped Nasdaq value motion erase some draw back.
NDX – NASDAQ PRICE CHART: DAILY TIME FRAME (21 OCTOBER 2020 TO 12 MAY 2021)
Chart by @RichDvorakFX created utilizing TradingView
The Nasdaq is at the moment buying and selling across the psychologically-significant 13,000-price stage. Failure to take care of altitude right here, which may comply with yesterday’s rejection of the 50-day easy shifting common, has potential to steer the Nasdaq a bit decrease towards the ascending trendline that connects the 02 November and 05 March swing lows. This potential space of technical assist can also be underpinned by the 61.8% Fibonacci retracement of the Nasdaq’s year-to-date buying and selling vary. Though, it’s price noting the Nasdaq is arguably trying a bit overextended right here.
That is judging by the relative energy index nearing ‘oversold’ territory and Nasdaq value motion buying and selling exterior its backside two-standard deviation Bollinger Band. That mentioned, it’s probably that the Fed will look by short-term spikes in inflation, pegging them as transitory value will increase resulting from provide constraints and anchoring long-term inflation expectations round 2%. This additionally probably signifies that the Fed will keep patiently dovish till ‘substantial additional progress’ is made towards reaching its different mandate – full employment. Nonetheless, I might have ten-year Treasury yields close to the highest of my radar for a possible bellwether to the place the Nasdaq heads subsequent as a result of just lately sturdy inverse relationship between the Nasdaq and Treasury bond yields.
— Written by Wealthy Dvorak, Analyst for DailyFX.com
Join with @RichDvorakFX on Twitter for real-time market perception
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