US stock futures dip ahead of closely watched Federal Reserve decision

US stock futures fell on Tuesday and government bonds came under pressure, as investors awaited a closely watched interest rate decision by the US Federal Reserve.

Contracts tracking the S&P 500 Index on Wall Street lost 0.7 percent, while contracts tracking the tech-heavy Nasdaq 100 lost 0.8 percent.

In Europe, the regional Stoxx Europe 600 Index fell 0.8 per cent, reversing its earlier gains, while the FTSE 100 in London fell 0.4 per cent as traders returned to their offices after a public holiday in the UK to mark the state funeral of Queen Elizabeth.

Volumes are expected to remain light ahead of multiple central bank meetings this week, as rate-setters prepare to discuss the extent to which they can raise borrowing costs to curb price growth in the face of the global economic slowdown.

Shares in Ford fell nearly 5 percent in pre-market trading on Tuesday, after the automaker said on Monday that supplier costs linked to inflation during the third quarter would be about $1 billion higher than originally expected. The announcement came days after a profit warning from FedEx, which is seen as a driver of global economic growth, sent the group’s shares soaring. Biggest daily drop ever.

US government debt yields rose on Tuesday, after hitting their highest levels in more than a decade on Monday ahead of the start of the two-day Federal Reserve meeting in which rate setters are widely expected to deliver a third 0.75 percentage point jumbo in a row. rate increase.

The yield on the 10-year US Treasury added 0.06 percentage point to 3.56 percent, after it crossed the 3.5 percent threshold in the previous session for the first time since April 2011. The yield on the policy-sensitive two-year bond remained at a 15-year high of 3.96 percent. Bond yields rise as their prices fall.

Selling pressures were most evident in the euro zone debt markets, where the yield on German 10-year bonds rose 0.13 percentage point to 1.92 percent. The yield on 10-year British Treasuries also added 0.13 percentage points to 3.29 per cent, while the yield on the two-year Treasuries rose 0.18 percentage points to 3.29 per cent.

In the UK, markets are estimating the probability that the Bank of England will raise interest rates by 0.75 percentage points this week in response to higher inflation, after increasing by 0.5 percentage points in August, the largest rise in 27 years. Faster rate action by other central banks has increased pressure on the Bank of England to increase the pace of monetary tightening to combat inflation and support the pound.

Sterling fell 0.1 percent to $1,142 after falling on Friday to its lowest level against the dollar since 1985. The pound has lost nearly 16 percent so far this year as business confidence wanes as the British economy hovers on the brink. Recession can happen. It runs until the end of 2023, according to the Bank of England’s forecast.

Sweden’s central bank raised its policy rate by a full percentage point to 1.75 percent on Tuesday, a move larger than expected by analysts and the largest increase since the early 1990s. The Riksbank said raising interest rates would reduce the risk of persistently high inflation in the long term. Inflation is at 9 percent in Sweden, the highest in 30 years, and the central bank expects the economy to contract by 0.7 percent in 2023.

The central banks of Japan, Norway, Brazil, South Africa, the Philippines, Indonesia, Taiwan, Turkey and Switzerland are also set to announce their latest interest rate decisions this week, triggering additional financial tightening globally.

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