After yesterday’s algo-driven mad dash to close the S&P green both for the day and for the year following Fed minutes that came in shocking hawkish, the selling has continued overnight, led by the commodity complex as rate hike fears have pushed oil back down some 2% from yesterday’s 7 month highs, which in turn has dragged global stocks lower to a six-week low, while pushing bond yields higher across developed nations as the market suddenly reprices the probability of a June/July rate hike.

For now the critical S&P500 support level at 2030 continues to hold, however that may be put in test today, leading to the next leg lower in the S&P. Should stocks open here, the S&P will be red for the year.

The dollar continued to rise overnight after its biggest jump in 6 months, which led to a substantial devaluation of the Chinese Yuan as a result, which in turn may have spooked the global markets who still remember that China was the primary catalyst that unleashed the wave of selling in December and January.

The hawkish Fed minutes pressed the MSCI All Country World Index which declined for a third day, and dropped to the lowest level since April 8. U.K. gilts and German bunds fell, after Treasuries posted their biggest losses of the year. Currencies in Australia, China and South Korea sank to two-month lows against the dollar, while crude oil retreated and copper fell toward levels last seen in February. Gold and silver slipped to this month’s lows.

Many were shocked by the Fed’s minutes which come from a meeting where Yellen was said to be fully dovish. “There is this enormous policy uncertainty,” said Randal Jenneke, Sydney-based fund manager at T. Rowe Price. “The Fed has changed the goal posts so many times, everyone is confused. No one knows when they’re going to raise rates and no one knows what’s going to be the key thing to trigger the decision.“

This is what the Fed calls successful communication. There will be more of it today.

Comments from Fed Vice-Chair Fischer and President Yellen will likely be crucial in terms of really hammering home expectations and we’ll hear from the former this afternoon. Fischer’s event is closed to media so it remains to be seen how much he’ll delve into policy outlook but we will also hear from Dudley this afternoon who’s views are closely aligned to those of Yellen so that could be worth watching out for. As a reminder Dudley last said about two weeks ago that two rate hikes this year was a ‘reasonable’ expectation.

According to Bloomberg calculations, Fed Funds futures show the odds of a move surged to 32 percent on Wednesday, after tripling to 12% from 4% in the prior session as data on inflation, housing starts and industrial production beat forecasts. Following months of expectation and fluctuations last year, including a selloff caused by China’s unexpected devaluation of the yuan, markets reacted calmly when the Fed finally raised rates in December for the first time since 2006, reflecting investor conviction in the U.S. recovery’s ability to withstand tighter monetary policy.

“The markets were getting a little too complacent for the scope for rate hikes this year and next year but the fed minutes were on the hawkish side yesterday so that made investors nervous,” said Allan von Mehren, chief analyst at Danske Bank told Bloomberg. “We see some repricing on bond yields and it’s also having a negative spill-over on equity markets.”

In other, otherwise very bullish news, Moody’s lowers US growth outlook to 2.0% from 2.3% and cuts G20 EM growth to 4.2% vs. Prey. 4.4%, sees China growth slowing gradually to around 6.3% this year. However this time not even a major growth forecast cut was enough to send stocks soaring.

The Stoxx Europe 600 Index dropped 0.8 percent, with BHP Billiton Ltd. (BHP) and Rio Tinto Group (RIO) leading miners lower as commodities retreated. The European equity gauge has gone a month without posting a daily gain of at least 1 percent, and is down 4.5 percent from its April 20 peak. Futures on the S&P 500 lost 0.3 percent, indicating equities will decline after Wednesday closing little changed. Investors will look Thursday to an index of leading indicators in the U.S. for signs of the economy’s strength. Fed Vice Chairman Stanley Fischer and New York Fed chief William Dudley are scheduled to speak, while Wal-Mart Stores Inc. (WMT) is among American companies reporting earnings.

Oil fell below $48 a barrel on Thursday, pressured by a stronger dollar and as a surprise increase in U.S. crude inventories served as a reminder that supply remains ample despite output problems. As Reuters recaps, supply losses in Canada and Nigeria have lent support, but cooler weather was expected to help firefighters battling Canadian wildfires. Traders said Exxon Mobil is boosting output at Nigeria’s largest crude stream.

“The main factor weighing on prices is the much appreciated U.S. dollar,” said Carsten Fritsch, analyst at Commerzbank. “What is more, rain forecast in the Canadian oil province of Alberta is giving rise to hopes that the devastating wildfires there could be brought under control.”

Elsehwere, Egyptian stocks slipped for the first time in four days, falling 2 percent. The government has deployed naval ships to search for an EgyptAir Airbus A320 en route to Cairo from Paris that went missing off the coast overnight.

Market Wrap