Bonds came under pressure Wednesday and U.S. equity futures were subdued as investors braced for the biggest Federal Reserve interest rate-hike since 2000 and awaited more clues on how pugnaciously it will tackle inflation.
In Asia, stocks fell amid a slide in Chinese technology firms in Hong Kong. Sentiment soured toward the latter after the U.S. began a probe into Didi Global Inc.’s chaotic 2021 debut in New York. Markets in Japan and China are closed.
A further drop in Australian debt typified how bonds are wilting under a global wave of monetary tightening. Treasury futures dipped after the U.S. 10-year yield closed Tuesday near 3%.
There’s no cash trading due to the Japan break. A gauge of the dollar held near two-year highs. The greenback’s strength reflects caution over an array of risks spanning tightening financial conditions, China’s Covid lockdowns and Russia’s war in Ukraine.
The Fed is expected to raise rates by 50 basis points Wednesday and detail plans for the reduction of its balance sheet. Key for markets will be whether Chair Jerome Powell’s commentary contains any hawkish surprises that could stoke concerns about the threat of U.S. slowdown as borrowing costs climb.
