European stocks saw a rebound, snapping two days of losses, as oil prices declined and the bond market stabilized in anticipation of the Federal Reserve's interest-rate decision later today. The Stoxx 600 index rose 0.4% in London by 8:20 a.m. This positive movement was partly driven by outperforming bank shares, following JPMorgan Chase & Co.'s forecast of increased third-quarter trading and investment-banking revenue. Globally, MSCI's equities index edged 0.1% higher, while Asia-Pacific shares outside Japan climbed 0.6%, ending a four-day losing streak.
Simultaneously, the European Union made a significant geopolitical move. European Commission President Ursula von der Leyen proposed that Canada become the bloc's first associate member during her state of the union address in Strasbourg, France. Canadian Prime Minister Mark Carney was present for the announcement. This proposal aims to elevate the relationship between the EU and Canada to the highest possible level, establishing a new type of alliance focused on trade and security.
The bond market, despite easing slightly, remains a concern, with traders looking ahead to the Fed's decision. The yield on the U.S. 10-year Treasury note stood at 5% after briefly hitting its highest level since 2007 on Tuesday. Markets are pricing in a 92.5% probability of a 25-basis-point interest rate increase by the Fed. Inflation, geopolitical conflicts, and the national debt are cited as factors creating a "toxic stew" in the bond market.
