Yet in Europe, sterling came under pressure after data showed Britain's high inflation rate fell unexpectedly in August, prompting speculation that the Bank of England could pause its historic run of interest rate hikes as soon as Thursday.
Two-year Treasury yields were down 3.5 basis points in London trade at 5.07%, having risen sharply on Tuesday, when five- and 10-year Treasury yields reached 16-year highs.
World stock markets were edging higher ahead of the Fed rate decision.
UK gilt yields fell sharply as investors slashed bets for a rate hike on Thursday, with two-year yields last down over 14 bps at 4.85% .
"Combined with their recent dovish commentary, we now expect the MPC to keep Bank Rate unchanged tomorrow and lower our forecast for the terminal policy rate to 5.25%," Stehn and co. added.
Persons:
DAX, Kai Pfaffenbach, Jerome Powell, Lee Hardman, Sterling underperformed, Goldman Sachs, Sven Jari Stehn, Stehn, Masato Kanda, Eugene Low, Dhara Ranasinghe, Samuel Indyk, Tom Westbrook, Toby Chopra, Chizu
Organizations:
REUTERS, Sterling, U.S, Treasury, Federal Reserve, Bank of England, Brent, Federal, Fed, Japan's Nikkei, MPC, Monetary, Bank of, New Zealand, Thomson
Locations:
Frankfurt, Germany, Europe, Saudi Arabia, Russia, U.S, London, Sweden, Switzerland, Norway, Britain, Japan, Asia, Pacific, Hong Kong, China, Singapore