US100 index is erasing recent gains and is currently trading more than 2% lower. One of the reasons may be rising government bond yields, as investors increasingly believe that the Federal Reserve will tighten faster the monetary policy to fight surging inflation and address the tightening labor market in spite of the surge in Covid-19 omicron variant infections. Around 58% of traders are betting that the Fed will start hiking rates already during the March meeting, up from around 27% just one month ago, according to federal-funds futures data. The 10-year Treasury yields strengthened to a 6-week high of 1.67% while the 5-year yield hit 1.392%, the highest since February 2020. Also, the 30-year yield reached 2.06%, the highest since October 26th. The market currently expects the FED to raise rates in March. Today's reading of the ISM manufacturing index may also weigh on market sentiment.
US 10-year treasury bonds yield rose sharply in recent days. Source: Bloomberg
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US100 index on the D1 interval is currently struggling to stay above the support marked with 23.6% Fibonacci retracement of the last upward wave. Should a break lower occur, downward move may accelerate towards EMA 50 (blue line). Source: xStation5
