US treasury secretary Janet Yellen’s efforts to calm nerves seem to be working, but the Fed’s high-stakes meeting on policy leaves markets on edge
Sydney — Asian shares staged a cautious bounce on Wednesday with hopes a global banking crisis would be averted vying with uncertainty over the outlook for US interest rates as the Federal Reserve holds a high-stakes meeting on policy.
The unease left both S&P 500 futures and Nasdaq futures barely changed. Euro Stoxx 50 futures edged up 0.2%, while FTSE futures rose 0.1%. All of which puts the Fed in a tough position as it decides whether to raise interest rates later today. Analysts at JPMorgan, on the other hand, stand with the majority and flag a rise of 25 basis points in part because postponing a move until May would threaten the Fed’s inflation-fighting credibility.
Investors have also swung back to expecting a further increase in May, but also imply some chance of a cut as early as July and rates at 4.25%-4.50% by year-end. European bonds have gone along for the ride. German two-year yields overnight recorded the biggest daily jump since 2008 as markets went back to pricing in more ECB hikes.
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