Yesterday US equities were under pressure coming into the afternoon’s Fed decision. The weakness increased as the takeaways turned hawkish. The S&P ended the day down 1.4% while Treasury yields jumped post-meeting. . The pressure continued this morning as US futures fell and global yields ripped higher. Iran responded to yesterday’s strike on its Pars gas field by hitting multiple targets in the Middle East, including Qatar’s huge Ras Laffan LNG plant.

The S&P opened down 0.6%, got as low as -1.0% and is currently back to around opening levels. We had already broken below the bottom end of the 6700-7000 trading range we were in since November, and today we fell below the 200 day moving average for the first time in over 200 days. Tomorrow is a big options expiration, and as positions roll and hedges adjust that could trigger more movement.

The Energy sector is outperforming, though energy commodities are well off their highs (Brent HOD $119, currently $109). Every other sector is lower, with Materials the laggard as metals sell off, driving miners lower. Financials are middle of the pack. Banks are trading modestly lower despite regulators proposing to ease capital requirement rules in place since 2008. That could make it easier for banks to re-engage in lending to areas it ceded to non-bank institutions.

Yields are extending their climb globally, especially at the short end. That includes a massive move in the UK where the 2yr s up ~30bp as prospects for a rate hike to tame inflation surge. In the US, the 2yr is up 7bp on a big Bear flattener as longer tenors are bid (30y -3bp). A 10y TIPS auction today tailed by 1.6bp but that doesn’t seem bad given the movement in the rates market today. With international rates soaring and the Dollar’s gains to date, the US Dollar Index is down today and currently at its lows.