Finance

U.S. stock index futures edged lower following a downbeat trading session that saw the Dow Jones Industrial Average drop more than 600 points. Investors are increasingly shifting focus away from corporate earnings and toward macroeconomic risks, particularly the upcoming August CPI and PPI inflation data. The combination of surging energy costs and looming policy decisions has fueled concerns that the Federal Reserve may implement a interest rate hike at its next meeting.

The yield on the benchmark 10-year U.S. Treasury note remained elevated near 4.8%, trading close to its highest levels in three years. Fixed-income markets are reflecting heightened inflation risks and a more hawkish monetary policy outlook ahead of critical inflation reports and upcoming government bond buyback announcements. Concurrently, short-term yields sensitive to Federal Reserve decisions also nudged higher as traders price in a stronger probability of a near-term rate increase.

The digital asset market faced headwinds as Bitcoin and Ethereum prices slipped, weighed down by escalating geopolitical tensions between the U.S. and Iran. Furthermore, international crypto exchanges began freezing accounts linked to Iran to comply with secondary sanctions and the suspension of critical OFAC licenses. Because cryptocurrencies are non-yielding risk investments, the combination of regional instability and expectations of higher interest rates continues to keep a lid on a broader market rally.