Sujata Rao gives a glimpse at what lies ahead.

On Tuesday, Nasdaq futures fell almost 1%. This means that the index which is heavily tech-based will likely add to its losses for the year of 4.5%. It has risen 12 times in the last 13 years and is now under pressure due to higher bond yields and interest rates. This index will likely lose more than its global benchmark MSCI, which measures the broad equity market.

Capital Economics reports that 29 shares lost more than 10% this year due to the 4.5% loss.

Citi analysts note that the Nasdaq’s futures position has been shifted significantly short. They also point out that there are still $2 billion in long positions.

These investors will turn their attention to bond markets where the two-year U.S. Treasury borrowing cost has risen over 1% for just the second time since Feb. 2020. European 10-year German yields are nearing bursting at 0%, for the first-time since mid-2018.

As prices reach seven-year levels, inflation is all the rage. This is good news for many — earlier, the Bank of Japan indicated that Japan was now emerging sustainably from deflation. However, the bond sale has set the scene for a disappointing stock market session. Most Asian bourses have fallen and Europe appears to be opening weaker.

Central banks have all eyes now. While the U.S. Federal Reserve seems more likely to raise interest rates starting in March, Canada may move next week, while Britain’s labour forecasts on Tuesday make it almost certain that the Bank of England will hold a Feb 2 meeting.

Graphic: Nasdaq, https://fingfx.thomsonreuters.com/gfx/mkt/akpezeydkvr/Pasted%20image%201642456967170.png Key developments that should provide more direction to markets on Tuesday:

The BOJ maintains an ultra-easy policy, but raises the price outlook.

Employers in the UK add record numbers of jobs

On tight supply and Mideast tensions, Brent reaches a record 7-year-high

EU finance ministers meet to discuss minimum corporate tax, EU budget, and recovery fund

-ECB Vice President Luis de Guindos speaks

Francois Villeroy de Galhau is the Bank of France governor

-Riksbank Governor Stefan Ingves speaks

ZEW in German

BNY Mellon, Goldman Sachs (NYSE) -U.S. earnings Charles Schwab (NYSE:)