The U.S. Treasury market faced its steepest sell-off in nearly 18 months on Wednesday. Strong economic data, rising oil prices, hawkish Federal Reserve signals, and a weak auction of 5-year Treasuries combined to push the 10-year Treasury yield to 5.113%, the highest level since 2007.
The selloff began with rising oil prices. Market expectations had been building for renewed diplomatic engagement between the U.S. and Iran during the United Nations General Assembly, but Iranian President Raisi stated that Tehran would not fully open the Strait of Hormuz as long as sanctions remain in place.
Subsequently, S&P Global released manufacturing PMI at 57 and services PMI at 58.7—both above forecasts—along with hawkish remarks from Fed Governor Waller, triggering a complete collapse in the Treasury market.
Waller, speaking in Chicago, said risks to achieving the Fed’s inflation target have increased. Inflation remains above the 2% target, with no clear or timely trend toward returning to it.
Kevin Hassett, Director of the National Economic Council, publicly questioned several recent Fed officials’ support for further rate hikes, calling continued monetary tightening “concerning” given the evident decline in core inflation indicators. His comments highlighted growing tensions between the White House and the Fed over the interest rate path.
Gold fell sharply from around 4,330 to 4,270, currently consolidating above the support zone of 4,250/60. The Nasdaq 100 index retreated from above 30,500 to around 30,300, and may soon test liquidity near 30,200.
Plugin Case Analysis
Gold: Price has shifted from sideways consolidation into a downward-tilted range. Today, focus on potential rebound after liquidity cleansing around the 4,250/60 zone, which also coincides with the lower channel boundary. Additionally, if price rebounds and reclaims the 4,305/15 area, further upside could extend toward the mid and upper channel levels.
(Gold 15-minute chart)
Nasdaq: After breaking below the 30,500 liquidity zone yesterday without a bounce, the index dropped directly to 30,300 before stabilizing. Today, watch for signs of a rebound only after another sweep through nearby liquidity.
(Nasdaq 15-minute chart)
Crude Oil: Overnight, prices rebounded above 96, but have since retraced most gains, returning to consolidate within the key 94/95 multi-month battle zone. Watch for a sell signal on a break below 94.
(Crude Oil 15-minute chart)
Key Financial Data & Events Today:
20:30 U.S. Initial Jobless Claims
22:00 U.S. August New Home Sales (annualized, thousands)
