Fed Rate Hike Looms Amid Inflation Fears and AI Worries

Financial markets are on edge as the US Federal Reserve meets to tackle high inflation. Oil prices have jumped, and U.S. bond yields have rallied, while equities retreated. The Brent crude futures pushed towards $110 a barrel, with average diesel prices in the United States hitting a record high of just under $6.27 a gallon.

Susannah Streeter, chief investment strategist at Wealth Club, said 'There's no let-up in the volatility rippling through financial markets, with energy prices staying painfully elevated and worries swirling about the knock-on effect for inflation and interest rates.'

The yield on the 10-year U.S. Treasury note hit 5.03 percent, a level last seen in 2007 before the global financial crisis, as investors price in a likely hike in US interest rates.

Market expectations for a 25-basis-point rate increase have risen sharply after official data published last week showed U.S. annual inflation remaining far above the Fed's target.