World share markets rose on Wednesday and short-term U.S. bond yields hit 4 1/2-year highs as investors braced for the possibility of the first interest rate hike in the United States in almost a decade.
A late 5 percent surge in Chinese stocks had helped Asia’s bourses .MIAPJ0000PUS finish more than 2 percent higher, while gains of 1.0, 0.7 and 1.5 percent for London’s FTSE .FTSE, Frankfurt’s DAX .GDAXI and Paris’s CAC 40 .FCHI meant a solid day for Europe too.
Wall Street, though, was expected to resume marginally in the red ESc1, as markets remained in a state of flux over the likelihood of a rate increase by the Fed at its two-day meeting later on Wednesday.
A key gauge, Fed fund futures <0#FF:>, currently see only a 30 percent chance that Janet Yellen and her colleagues will pull the trigger.
But surveys of economists have been more like 50-50, and rises in U.S. government bond yields US2YT=RR show traders appear to be hedging their bets.
U.S. data published on Tuesday had done little to change expectations and inflation figures due at 1230 GMT are unlikely to sway many opinions either.
“It’s more a day for thinking about tomorrow,” said Kit Juckes, head of currency strategy at Societe Generale in London.
“Positions are coming off rather than going on. We have seen the front end (short-dated U.S. government bond yields) rally but it hasn’t really sent the dollar roaring.”