U.S. stock futures turned sharply lower after James Bullard said in a CNBC interview that the Fed was expecting a good reopening, but the reopening has been better than expected so it’s natural to ‘tilt hawkish’. The market is set to close the week lower.
On Thursday, markets were mixed with the S&P 500 slightly lower by 0.04%, the Dow fell for a fourth straight day, down 0.62%, the longest losing streak since January 27. The Nasdaq-100 rose to a record high, up 1.3% with help from Apple, Microsoft, Nvidia, and Amazon. The Russell 2000 was lower by 1.2%. The 10-year Treasury yield jumped above 1.51. The Dollar rose for the fifth day, the longest winning streak since March 2020. Gold is up marginally but on track for its worst week since March 2020. The VIX is above $20. Crude oil is down 1%, pressured by the stronger dollar but remains near multi-year highs. Bitcoin is flat, just below $38K. Commodities have also been hit hard this week with soybean futures wiping out its gains for 2021 and rallies in corn, lumber, copper, silver, and platinum losing steam.
One man’s comments have accelerated the sell-off, James Bullard’s, the St. Louis Fed Chair. He said there is upside risk to the inflation forecast and confirmed that Fed Chair Powell has opened the taper discussion this week. He’s also concerned about the housing market froth commenting that we don’t want to get back in the housing bubble game that caused distress in 2008. He went on to say he does not believe that the Fed needs to be in Mortgage Back Securities. However, it’s important to note Bullard isn’t a voting FOMC member.
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