Market Volatility: Good News Turns Bad, Bad News Gets Worse

The U.S. stock market is experiencing a rough time as both good and bad economic news are resulting in sell-offs. The decline in initial jobless claims and consumer confidence led to sharp sell-offs in the S&P 500. However, the market direction may be driven by the surge in bond yields, which is not necessarily driven by economic data. Deutsche Bank suggests that the rise in long-term yields is due to fiscal deficits, quantitative tightening, and ruling out rate cuts by central banks. The bank warns that this tightening policy could lead to a similar backdrop as seen in 2000 and 2007 unless the Fed becomes more dovish on rates or pursues a less aggressive quantitative tightening program. U.S. stock futures were slightly stronger as the 10-year yield fell, and crude-oil futures traded higher.