US Bond Yield At Near 15-Year High, Stock Markets Down Ahead Of Fed Meet

Today, the US Federal Reserve is set to announce its next policy measures. Ahead of the US Fed meeting, markets are showing some turmoil over the last week. The US Stock markets are showing a sharp down-bound today. S&P 500 falls by 1.13%, quoted at 3,855.93 points, while Nasdaq Composite falls by 0.95%, quoted at 11,425.05 points, at the time of writing. On the other hand, the Bond yield on 2-year US Treasury note gained to almost a 15-year high level on Tuesday, and hit 3.992%. "The last time its yield broke above 4% was October 18, 2007," Reuters reported. The 2-year US Treasury note is 'highly sensitive to shifts in monetary policy'.

The US CPI inflation stood at 8.3% in August, much higher than the central bank's target of 2%. In July it was recorded to be at 8.5%, reflected only a marginal fall in August. So, the US Fed is expected to be more hawkish against inflation at this FOMC meeting. Analysts are expecting that the Fed can raise the interest rate by around 75 bps. However, CNBC reported that Wells Fargo, Securities' Michael Schumacher suggests the Federal Reserve is raising rates too slowly. Fargo would have considered a 150 basis point hike this week if he were Chair Jerome Powell.

Additionally, Reuters reported, "Yields on the benchmark 10-year Treasury shot to 3.604% before paring some gains. They were up 8.6 basis points to 3.575% after topping 3.5% for the first time in 11 years on Monday. The two-year yield rose 2.5 basis points to 3.971%."

However, if the Fed hikes the interest rate by 75 bps, markets can also absolve the decision. Gold rates have already started to revive marginally, from the last two day's sharp fall. Comex gold futures was quoted at US$ 1,677.90/oz, gaining by 0.41%. On the other hand, the US Dollar index is at a 52-week high level again today, standing at 110.87, ahead of the US Fed meeting.