Stocks stymied pending Fed and yen decisions
By Lawrence White
LONDON (Reuters) — Stocks stagnated while bond yields edged higher on Wednesday as markets awaited a key policy decision from the U.S. Federal Reserve, as well as any signs of Japanese authorities intervening to prop up the battered yen.
Europe's benchmark STOXX index was up just 0.04%, as was MSCI's broadest index of Asia-Pacific shares outside Japan, while U.S. futures slipped 0.4%.
Japan's Nikkei was 2% higher as investors remained on red alert for yen-buying intervention from authorities to try to scrape the currency off the floor after central bank policy tweaks failed to reverse its recent losses.
The spotlight on Wednesday, meanwhile, will firmly be on the Federal Reserve's policy decision.
With the central bank widely expected to hold rates steady, investors will scrutinise Fed Chair Jerome Powell's speech to gauge where interest rates are headed and how long they will stay higher.
«The Federal Reserve is in a desirable position as it prepares to announce policy this evening thanks to the combined effect of rate hikes and higher Treasury yields keeping pressure on prices,» said Francesco Pesole, strategist at ING.
Powell is likely to tread carefully in trying to mitigate any inference that further rate hikes are completely off the table, despite the tightening in financial conditions, Pesole said.
Markets are pricing in a 29% chance of a 25 basis point (bp) hike in December and a 35% chance of a 25 bps hike in January, the CME FedWatch tool showed.
S&P e-mini futures fell 0.43%, while NASDAQ futures were down 0.47% and DOW futures sank 0.33%.
Treasury yields remained elevated, with the yield on 10-year Treasury notes up 3 bps to 4.9011%. The yield on the 30-year Treasury bond was up 4 bps to
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