Dow futures slip as 10-year Treasury yield hits highest level since 2007 ahead of Fed meet

US stock futures edged lower on Tuesday, September 15, as investors braced for the Federal Reserve’s interest-rate decision on Wednesday, while rising Treasury yields and concerns around the outlook for artificial intelligence added to market caution.

Futures tied to the Dow Jones Industrial Average fell 0.3%, while S&P 500 futures slipped 0.2%. Nasdaq-100 futures were down 0.2%.

The benchmark 10-year Treasury yield climbed to 5.041% on Tuesday, its highest level since 2007. Bond yields and prices move in opposite directions.

Global government bond yields have remained in focus as investors assess the impact of the ongoing US-Iran war on inflation and the possibility of a more hawkish stance from central banks.

Dollar, oil prices rise

The dollar gained on Tuesday, with the dollar index climbing above 99 to a two-week high as investors reduced risk and sold AI-related stocks amid concerns that the sector could slow the pace of development.

Oil prices also moved higher after Saudi Arabia shut a key pipeline that bypasses the Strait of Hormuz. Brent crude futures for November delivery rose marginally to above $106 a barrel, while WTI futures gained 1% to trade above $102.

The moves in oil and Treasury yields have added to the focus on Wednesday’s Fed decision. Fed funds futures indicate a roughly 92% probability of a 25-basis-point rate hike from the current target range of 3.50%-3.75%.

Investors were also monitoring the fallout from an essay by Anthropic CEO Dario Amodei, which highlighted concerns around AI safety and the potential risks associated with the rapid development of the technology.

Asian markets largely closed lower on Tuesday. Japan’s Nikkei 225 was little changed at 63,484.1, while South Korea’s Kospi fell 0.85% to 6,627.26.

Hong Kong’s Hang Seng Index declined 1% to 24,667.24, while mainland China’s CSI 300 dropped 0.67% to 4,450.04.

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