S&P500 down 1 percent, NASDAQ down more by 1.3 percent, the dollar saw a reversal – it was well behaved for most of the US session and then sharply rose into the close, the DXY is back at about 95.8 – treasury yields are much better, they were down about 6 basis points (bps) across the maturities 5-year, 10-year, 30-year, so there has been a bit of a pullback. However, hawkish expectations or rather markets pricing what the US Fed will do stays intact 27 bps for March and 103 bps for the full year 2022. Oil hardly moved at about USD 88.4 per barrel or so.

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It is not just the US where rates are going up, it is happening in most developed markets. It ranges between 20 bps and 150 bps depending on what developed market one wants to look at. There are two ways to look at this. The fact is this correction in the US is coinciding and may be triggered as well with what the Fed is saying it will do but it is also a fact that the US has also had a straight linear run without a significant meaningful pullback. So it is happening at the same time and people will conflate both together but the fact also is that if rates are going up and they will continue to go up through the course of this year then one will talk about a bit of a regime change which the market has not had for about last 12-13 years. The market has been in an extremely low interest rate environment around the world since the global financial crisis, forget about the COVID-19 crash.

Right now the fact is S&P500 is pretty close to its 200 day moving average (DMA), it has given up about 6-7 percent in this recent bout of selling and maybe the pullback somewhere around here is due to go in the other direction as well, a bounce.

Also Read: Oil prices tumble as US inventory build prompts profit-taking

Nifty has lost 600-650 points in three sessions, nothing happens in one straight light so one should be mindful of that as well.

Watch the accompanying video of CNBC-TV18’s Prashant Nair for more details.

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