Stocks, bonds, cryptos and gold struggle as yields press higher

We are continuing to see the same type of patterns in the markets where any bounces in equities, bonds, metals and major currencies get sold into after a brief rally. The US dollar remain King of FX. Investors are finding it difficult to justify buying any risk-sensitive assets right now, with rising interest rate expectations driving bond yields higher. All the attention is on Wednesday’s FOMC interest rate decision. HERE is everything you need to know about it. In an environment of rising interest rates around the world, traders continue to prefer selling into assets that have little or no yield, such as low-div stocks and gold.

Ahead of the Fed’s rate decision, the US 10-year broke the 3.5% barrier today to reach its highest level since February 2011, while the 30-year yield hit 3.61%, its highest point since April 2014.

After every bit of a relief rally, whatever opportunity investors get to make profit, they take it. And why wouldn’t they, given everything that’s happening in the world right now? The economic outlook remains grim. Inflation may have eased a little bit; it is still far too high and may remain elevated for longer than expected. This is what happened again this week. US index futures had rallied into the close on Monday, but they started to roll over once the new day started in Asia, before the selling continued after the US cash markets opened. Gold and silver fell, with the former remaining under pressure after it broke to a new low for the year sub $1680 last week as rising interest rate expectations continue to weigh on zero-yielding assets.

Going forward, it is all about when the interest rate hikes are fully priced. Until this happens, it is unlikely that the stock market will be able to shine very brightly. How quick the markets will price in rate hikes depends pretty much on incoming data, especially inflation figures.

The Dow Jones remains inside a bear trend, given those longer-term lower lows and lower highs, with the 200-day average now pointing lower and holding comfortably above the market. Old supports are turning into resistance. One such area is at around 31000, where the index had previously bounced from. But today, this area has turned into resistance, confirming that the sellers remain in full control of price action. From here, the Dow could fall towards the low it had reach in the summer, ahead of a busy week.

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