US futures have turned negative, with European stock markets reversing earlier gains as rising yields continue to weigh on sentiment.

Jerome Powell's soothing tones and some positive results from J&J on the vaccine front had given markets a boost late Wednesday, going into today, but already we're seeing that fade. Despite Powell's assurances, investors are growing increasinly convinced that higher inflation will prompt central banks to tighten sooner.

Yields are rising across the board, a sign of confidence in the global economy to recover powerfully in the post-pandemic world. But it's also a massive headache for central banks keen to remain extremely accommodative in the early stages of the recovery. They have a job on their hands if we continue to see yields rising as they are.

The risks of a taper tantrum are rising, which is why we're seeing this unease in the markets. They're still holding up quite well under the circumstances, the rally has simply stalled at the moment, but nerves are clearly evident. Tech isn't holding up quite so well, with the Nasdaq seen underperforming once again today.

Sentiment may face a number of tests this week if we do see inflation appearing in the data. Even if it is driven by base effects or by other temporary factors, investors may take some convincing that the Fed and others aren't going to be tempted to pull the trigger early in order to rein it in.  

Oil higher but losing momentum

Oil prices are edging higher today but once again there does appear to be flagging momentum in the rally, perhaps a sign that we're heading for a correction in the incredible four month bull run. Prices have rebounded more than 75% for a multitude of reasons and given the expectations for the pace of the recovery, there's good reason to think it isn't over.

But with momentum appearing to slow a week before the next OPEC+ meeting, crude may be positioning for a small correction, which under the circumstances would be quite healthy. There's still plenty of downside risks in the market and one of them is OPEC+ unity coming under strain in the coming months.

Higher oil prices and a much improved economic outlook doesn't just provide an opportunity for the group to pare back production cuts after almost a year of coordinated action, it also increases the risk of US shale doing so, something that members will be all-too-aware of. And that may make an agreement that much harder to come to. We saw the sacrfice Saudi Arabia had to make in January to get it over the line. We can't expect that to continue.

Gold slides on higher yields

We're seeing some interesting moves in gold on Thursday, with the yellow metal slipping around 0.7% despite the dollar index also being off around 0.5% and below 90. While the greenback does once again find itself out of favour, US yields are still rising which is likely why gold is also not feeling the love.

Gold recovered from below $1,800 on Wednesday to end the day just above here but it's under pressure once more today and continues to look vulnerable despite what we're seeing in the dollar. The dollar move is interesting because 90 appears to be such a significant support level, but gold is not buying into it at the moment. It will be interesting to see which of these has legs.

Only a matter of time

Bitcoin appears to have consolidated over the last couple of sessions close to $50,000 after plunging earlier in the week in the aftermath of Elon Musks admission that it does "seem high lol". The higher the price goes, the more of a target it's going to have on its back, with Janet Yellen the latest to take a swipe this week. I'm not convinced either of these are going to have a lasting impact on the price and it's maybe even a little surprising it hasn't bounced back already. I'm sure we won't be waiting long.

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