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US futures withdraw before Fed decision

U.S. stock futures fell on Tuesday and government bonds came under pressure, as investors awaited the Federal Reserve’s closely watched interest rate decision.

Contracts that track Wall Street’s S&P 500 index lost 0.7%, while those that track the tech-heavy Nasdaq 100 fell 0.8%.

In Europe, the region’s Stoxx Europe 600 index fell 0.8%, reversing earlier gains, while London’s FTSE 100 fell 0.4% as traders returned to their desks after the holiday season. of the United Kingdom to mark the state funeral of Queen Elizabeth.

Trading volumes are expected to remain light ahead of more central bank meetings this week, with rate-setters poised to discuss how they can raise borrowing costs to limit price growth during the global economic downturn.

Shares of Ford fell nearly 5% in pre-market trades on Tuesday, after the automaker said on Monday that inflation-related supplier costs in the third quarter would be high. about $1 billion more than originally planned. That announcement comes days after a profit warning from FedEx, widely seen as a general driver of global economic growth, sent shares of the group higher. biggest daily record drop.

Yields on U.S. government debt rose on Tuesday, after hitting their highest level in more than a decade on Monday before the start of the Fed’s two-day meeting in which rate-setters forecast ant will deliver the jumbo 0.75 percentage point for the third time in a row. rate increase.

The 10-year US Treasury note yield added 0.06 percentage points to 3.56 percent, pushing above the 3.5 percent threshold in the previous session for the first time since April 2011. The yield on the bond policy-sensitive two-year ballot. remains at a 15-year high of 3.96%. Bond yields increase as their prices fall.

Selling pressure was more pronounced on eurozone debt markets, with 10-year German yields rising 0.13 percentage points to 1.92%. The UK’s 10-year gilding yield also increased 0.13 percentage points to 3.29%, while the two-year gilding yield increased 0.18 percentage points to 3.29%.

In the UK, markets are pricing in the possibility of the Bank of England raising interest rates by 0.75 percentage points this week in response to high inflation, following a 0.5 percentage point increase in August. strongest increase in 27 years. Slower action on interest rates by other central banks has increased pressure on the BoE to step up the pace of monetary tightening to combat inflation and support the pound.

The British pound fell 0.1% to $1.142 after sinking on Friday, to its lowest level against the dollar since 1985. The pound has lost nearly 16% so far this year on economic confidence. Sales slide as the UK economy teeters on the brink of a recession that could last until the end of 2023, according to BoE forecasts.

Sweden’s central bank raised its policy rate to 1.75% on Tuesday, a move larger than analysts expected and the biggest increase since the early 1990s. know that pushing up interest rates will reduce the risk that high inflation will persist in the long run. Inflation is running at 9% in Sweden, a 30-year high, and the central bank has forecast that the economy will shrink by 0.7% in 2023.

Central banks in Japan, Norway, Brazil, South Africa, Philippines, Indonesia, Taiwan, Turkey and Switzerland will also announce their latest decision on interest rates this week, leading to a tightening of the financial system. major additions globally.

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