Investors across Europe are bracing for a pivotal Federal Reserve interest-rate decision, with markets pricing in a 92.4 percent chance of a 25-basis-point rate hike.
The anticipated hike would mark the Fed’s first rate increase since July 2023, arriving just seven weeks before the midterm elections.
The timing of the move has raised expectations that the White House may respond with fresh criticism of the central bank’s monetary policy direction.
Fed Chair Kevin Warsh is scheduled to hold a press conference following the decision, which could provide important signals about the path of future rate increases.
Updated economic forecasts and rate projections released alongside the post-meeting statement will be closely watched by traders and analysts worldwide.
Asian markets traded modestly higher in cautious sessions, with U.S. stock index futures edging up after two consecutive days of losses on Wall Street.
The yield on the U.S. 10-year Treasury bond slipped to 4.9875 percent in Asian trade, pulling back after breaching the psychologically significant 5 percent mark on Tuesday for the first time in three years.
The U.S. dollar held gains near a two-week high, while gold jumped 0.7 percent to $4,325 an ounce, recovering after a two-day decline.
Oil prices slipped approximately half a percent after industry data revealed an unexpected build in U.S. crude inventories, adding further complexity to energy markets.
Both Brent and WTI contracts had settled more than $3 higher on Tuesday, reaching their highest levels since May 19, amid expectations of prolonged disruption to Saudi Arabian oil flows following a drone attack on its east-west pipeline.
Saudi Arabia subsequently suspended Yanbu oil loadings and cancelled some cargo deliveries to European customers, intensifying global supply concerns.
U.S. stocks closed lower overnight, weighed down by persistent worries about inflation, the trajectory of interest rates, and the scale of the U.S. government’s debt burden.
The benchmark 10-year Treasury yield briefly touched 5.041 percent, its highest level since July 2007, as oil prices hit four-month highs following reports of fresh Houthi strikes on Saudi Arabia.
The S&P 500 declined half a percent to its lowest closing level in over a month, while the Dow fell 0.6 percent and the Nasdaq Composite shed 0.8 percent.
European equities fell to three-month lows on Tuesday, driven lower by oil-fueled inflation fears as tensions across the Middle East continued to escalate sharply.
The pan-European STOXX 600 fell 0.3 percent, with Germany’s DAX sliding 0.2 percent, France’s CAC 40 dipping 0.3 percent, and the U.K.’s FTSE 100 losing 0.4 percent.
