By Gregor Stuart Hunter
SINGAPORE, Sept 16 (Reuters) – Stocks were in a holding pattern in the Asian trading session on Wednesday as a rise in global bond yields and oil prices paused ahead of the Federal Reserve’s policy decision due later in the day.
MSCI’s broadest index of Asia-Pacific shares outside Japan fluctuated between gains and losses after declining during the four past sessions and was last trading up 0.3%, with gains for Taiwanese shares offset by declines in China. The Nikkei 225 slid 0.1%, while S&P 500 e-mini futures nudged 0.1% higher.
The yield on the U.S. 10-year Treasury bond was 0.85 basis point lower at 4.9875% in Asian trade after breaching the 5% mark on Tuesday for the first time in three years, ahead of a rate decision from the Federal Reserve and a media conference by Fed Chair Kevin Warsh.
“We maintain our tactically cautious/neutral view into the Fed,” JPMorgan analysts wrote, noting that the market consensus expectation is for a 25 basis-point rate hike accompanied by little forward guidance. The meeting “could be a clearing event” for the market “to reset rate hike expectations,” they added, but warned “inaction risks institutional credibility” and could provoke a violent response from equities.
U.S. President Donald Trump has repeatedly stated a preference for lower interest rates, saying last month the U.S. will stop trading with countries with which it has a trade deficit if the Fed does not cut rates.
Traders have looked through these threats and believe that a hike from the Federal Reserve is almost assured, pricing an implied 92.4% probability of a 25-basis-point hike when it announces its policy decision, according to the CME Group’s FedWatch tool, compared to a 59.4% chance a week ago.
Overnight on Wall Street, the S&P 500 slumped 0.5%, marking its second consecutive day of declines as the yield on the 10-year Treasury bond hit its highest since 2007.
“U.S. equity markets closed lower overnight as rising Treasury yields, another jump in crude and the polarised debate around pacing AI development left the market in a cautious mood,” said Tony Sycamore, market analyst at IG in Sydney.
The U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, was trading near a two-week high at 99.675.
Oil prices slipped in Asian trade, with Brent crude futures down 0.8% at $107.86 a barrel after rising 2.9% on Tuesday as shipping industry sources said crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu had been suspended and Riyadh cancelled some cargo deliveries to European customers.
Digital assets steadied from a rout after the U.S. Senate on Tuesday voted against advancing comprehensive cryptocurrency legislation backed by President Donald Trump. Bitcoin was flat at $75,898.71, while ether slipped 0.3% to $2,400.46.
(Reporting by Gregor Stuart Hunter; Editing by Sonali Paul and Christian Schmollinger)
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