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“My formula for success is rise early, work late, and strike oil.” – J. Paul Getty

It’s looking like a weak morning for risk assets as the yield on the 10-year US Treasury continues to rip higher and pulls equity prices lower. Fed Chair Powell and Treasury Secretary Yellen will be testifying in DC today, and in Powell’s prepared remarks, which have already been released, the Chair noted that inflation is likely to remain elevated in coming months before moderating down the road.  Outside of the Powell and Yellen testimony, negotiations over the debt ceiling, which don’t seem to be going anywhere at the moment, will be a key area of focus.

Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.

Futures are lower across the board, but it’s the Nasdaq where selling pressure has been the most intense.  The Nasdaq 100 tracking ETF (QQQ) is currently on pace to open down just over 1.5% which would represent the 13th downside gap of 1% or more for QQQ since the start of the year and the second one in September.  The table below lists each prior occurrence this year and shows the magnitude of the downside gap along with QQQ’s performance from the open to close.

Intraday performance of QQQ following downside gaps of 1%+ illustrate the buy the dip mentality of the market so far in 2021.  On the 12 prior days where QQQ gapped down more than 1%, the ETF saw an average gain of 0.30% (median: +0.55%) from the open to close with gains two-thirds of the time.  Will today’s trading continue the trend so far of 2021 where dip buyers step in?  We’ll know the answer to that in a little over seven hours.

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