Futures Crash, Dow Down 600 As Recession Reality Sets In Futures Crash, Dow Down 600 As Recession Reality Sets In In our preview of how to trade the Fed''s 75bps rate hike , we said to expect a " kneejerk move higher (especially if we get an outsized hike, hinting the Fed is hoping to catch up to the curve), then a gradual drift lower " (a reco which was later echoed by Goldman ). Sure enough, in the aftermath of the FOMC announcement yesterday, we got the knejerk move higher… and then overnight, the drift lower has also appeared tight on schedule, with futures tumbling in the US, undoing the entire post-FOMC move higher, and dragging global stocks lower as traders come to grips with the realization that 75bps of hikes - far from bullish - means that a recession is now on deck. As a result, SP futures were down 2.2%, tumbling as much as 130 points from overnight session highs, while Dow futures puked a whopping 600 points as central banks lose control over markets. European stocks headed for a 16-month low and Chinese Internet shares dropped in premarket New York trading And speaking of losing control, while normally yields would be tumbling ahead of a recession, this time they are doing the opposite with 10Y yields blowing out just shy of 3.50%, up 20 bps on the session after sliding following the biggest Fed hike in 28 years, as the bond market is starting to price in the uglier stagflation part of the coming recession, while stocks focus on the collapse in spending. “The volatility in bond markets is definitely not over,” Jasmin Argyrou, director and portfolio manager at Credit Suisse Private Bank, said on Bloomberg Television. “The likelihood is that policy rates in the US may need to go to a more restrictive stance than even the market is pricing in.” After the Fed raised interest rates by the most since 1994, Powell indicated a monetary stance similar to that of Paul Volcker, who broke the back of elevated inflation four decades ago but paid a price in the form of soaring unemployment and a credit squeeze.