Hike rates

US futures climb as Fed prepares to hike rates, while 10-year Treasury yield explodes to 3%

  • U.S. futures rose along with bond yields on Tuesday as investors braced for the Fed’s latest move.
  • The US central bank is expected to raise interest rates by 50 basis points on Wednesday.

U.S. stock futures rose and the key 10-year Treasury yield crossed 3% for the first time in more than three years on Tuesday as investors braced for the Federal Reserve to raise interest rates again on Wednesday.

S&P 500 Futures Contracts increased by 0.17%, Nasdaq 100 Futures Contracts were 0.04% higher, and Dow Jones Futures were up 0.16% at 3:55 a.m. ET.

In Europe, across the continent Stoxx 600 the index rose 0.8%. In Asia overnight, Hong Kong Hang Seng ticked 0.07% lower while Tokyo Nikki 225 down 0.11%.

The Federal Reserve is expected to raise interest rates at the end of a two-day policy meeting on Wednesday. Many investors expect the central bank to hike rates by 50 basis points, bringing the target range for the fed funds rate to between 0.75% and 1%.

Some strategists have said the Fed could hike as much as 75 basis points as it tries to tackle the highest inflation in over 40 years. The Fed raised rates by 25 basis points in March, the first increase since 2018.

Expectations that the Fed will raise rates have driven bond yields, which move inversely to prices, higher in 2022. Investors are demanding better bond yields if they expect interest rates to rise. be higher in the future.

The yield on the key 10-year US treasury bond rose above 3% for the first time since late Monday 2018. It was up 11 basis points at 3.008% as of 3:55 a.m. ET Tuesday.

“The Fed will debate a 75 basis point rate hike on Wednesday, but will most likely settle for a half point interest rate hike,” said platform analyst Edward Moya. Oanda trading.

Elsewhere in markets, Oil prices wavered as the European Union moved closer to banning imports of Russian crude. Germany dropped its opposition to a ban, but Hungary was a vocal adversary.

Crude Brent was down 0.71% at $106.82 a barrel. Meanwhile, Crude WTI was 0.66% lower at $104.49 a barrel.

Stocks fell sharply in 2022 as investors braced for central banks to end coronavirus-era easy money policies. The S&P 500 was down 12.8% for the year as of Monday’s close.