US equities face a big challenge with rates jumping but futures only moderately lower

I tend to think equities are slow to react to changes in the bond market and outlook for rates. That might be unfolding at the moment with S&P 500 futures down only 23 points, even as borrowing rates jump 10 bps at the front end and a 50 bps hike is placed squarely on the table.

An inflation scare is certainly unfolding and the Fed is going to have a tough time preaching about transitory bottlenecks while gasoline prices surge.

Some of that is already priced in after the tough start to the year for stocks. Today, Amazon is certainly offering a reason for optimism, with shares up 12% premarket after earnings. So there’s plenty to sort out but the backdrop isn’t conducive to an expanding market multiple, especially in tech.

I go back to Powell and his comments after the FOMC. He was like a changed man in that appearance, like someone who had been shook by things he was hearing about prices and wages. Since then oil is up almost $10 as well.