Treasuries fall on Powell; tech selloff spreads

U.S. index futures signaled a selloff in technology shares may continue, while Treasury yields jumped, as traders pruned bets for a dovish-for-longer Federal Reserve after the renomination of Jerome Powell as its chair.

U.S. index futures signaled a selloff in technology shares may continue, while Treasury yields jumped, as traders pruned bets for a dovish-for-longer Federal Reserve after the renomination of Jerome Powell as its chair.

Contracts on the Nasdaq 100 Index fell 0.3 per cent after Monday’s last-hour selloff in technology stocks. The subgroup was the worst performer in Europe Tuesday, sending the benchmark to a three-week low. A currency crisis deepened in Turkey, with the lira weakening past 12 per U.S. dollar. Oil slid with countries from the U.S. to India looking to tap their strategic reserves. Zoom Video Communications Inc. lost 8 per cent in premarket trading on slowing growth.

Investors are reducing expectations for a deeper dovish stance by the Fed after Powell got a second term. The chair himself sought to strike a balance in his policy approach saying the central bank would use tools at its disposal to support the economy as well as to prevent inflation from becoming entrenched. 

“While investors no longer have to wonder about who will be leading the Federal Reserve for the next few years, the next big dilemma the central bank faces is how to normalize monetary policy without upsetting markets,” Robert Schein, chief investment officer at Blanke Schein Wealth Management, wrote in an email. 

U.S. Treasuries dropped. The two-year rate jumped four basis points, helping to flatten the yield curve. The dollar was steady near its highest level since September 2020. The Japanese yen fell past 115 per dollar for the first time since 2017, before reversing losses.