Stocks tick up as oil falls, bonds stabilise ahead of Fed decision

Global stocks ticked higher on Wednesday as recent rises in government bond yields and oil prices paused ahead of a key U.S. Federal Reserve interest-rate decision later in the day. MSCI's global equities index edged 0.1% higher after falling in the previous two sessions. An index of Asia-Pacific shares outside Japan climbed 0.6%, snapping a four-day losing streak. Most bourses in Europe opened higher, with the pan-European STOXX 600 up 0.3%. Futures tracking the U.S. S&P 500 also rose after the benchmark index closed lower on Tuesday for a second straight session as the yield on the benchmark 10-year Treasury bond hit its highest level since 2007. The yield on the U.S. 10-year Treasury note stood at 5% after easing earlier in the session. It rose above that threshold on Tuesday for the first time in three years, briefly touching its highest level since 2007. The Federal Reserve will announce its policy decision later on Wednesday, followed by a press conference with Chair Kevin Warsh. "It's a question of credibility for him to hike right now. If he doesn't hike this evening, it could be a problem for the Fed's credibility, its independence and for the stock market," said Michaël Nizard, head of multi-asset and overlay at Edmond de Rothschild Asset Management in Paris. "It's also a question of guidance and a reaction function from the Fed. Today, it's very difficult to describe exactly what is a reaction function of the Fed." U.S. President Donald Trump has repeatedly stated a preference for lower interest rates, saying last month the U.S. would stop trading with countries with which it runs a trade deficit if the Fed did not cut rates. Traders have largely brushed aside those comments and see a rate hike as almost certain. Markets are pricing in a 92.5% probability of a 25-basis-point increase when the Fed announces its decision, according to CME Group's FedWatch tool, up from 61.2% a week ago. The dollar index, which measures the U.S. currency against a basket of six others, eased 0.1% to 99.6 after nearing a two-week high. The Japanese yen held steady at 155 per dollar after weakening over the previous two sessions ahead of the Bank of Japan's policy decision on Friday, when markets expect rates to rise to their highest level in 31 years. British stocks rose and the pound was flat after a domestic inflation reading did little to alter expectations ahead of the Bank of England's policy decision on Thursday, with markets largely expecting rates to remain unchanged. A rate increase is still expected by year-end. "Sterling could strengthen in the coming weeks if the BoE signals hikes to come amid higher inflation and energy prices. The Japanese yen, meanwhile, could weaken if the BoJ's message falls short of hawkish market expectations," UBS Global Wealth Management analysts said in a note. Central banks worldwide are weighing tighter monetary policy as fuel-supply disruptions caused by the Middle East conflict stoke concerns about energy-driven inflation. Oil prices retreated on Wednesday, with Brent crude futures down 0.6% at $108 a barrel after rising 2.9% on Tuesday, as reports that Saudi Arabia was offering additional crude cargoes via Oman eased concern about the scale of supply disruptions. Digital assets continued sliding after a sharp selloff in the previous session, when the U.S. Senate voted against advancing comprehensive cryptocurrency legislation backed by Trump. Bitcoin dipped 0.6% to $75,423 after losing 4% on Tuesday, while ether slipped 0.8% to $2,388 following a 6.3% drop in the previous session.