Morning Note: A Round-up of Global Financial Market News.

Traders are pricing in a more-than-90% chance the Fed will raise rates by 0.25% later today and are piling into bearish bond positions ahead of the decision in anticipation the sell-off has room to run. The key will be the tone of Chair Warsh’s press conference. The yield on the 10-year US Treasury is currently a touch below 5%, while gold has moved up to $4,333 an ounce.

Bank of Japan board member Kazuyuki Masu confirmed the bank will “continue to raise the policy interest rate” given inflation close to 2% and still-accommodative financial conditions. A rate hike at this week’s meeting is widely expected. The yen currently trades at 155 to the dollar.

The US-Iran war has reached a crisis point for Saudi Arabia as near-daily Houthi attacks and territorial gains in Yemen threaten Crown Prince Mohammed bin Salman’s multitrillion-dollar economic plans. Saudi Aramco is rerouting crude through Hormuz following the Houthi-triggered shutdown of the East-West pipeline. The US Navy’s Iran blockade has cost more than $7.1bn and is draining American military power elsewhere. Brent crude slipped back to $107 a barrel.

Mark Zuckerberg called for independent evaluators to assess AI models, while Trump administration officials are said to have met with Anthropic yesterday to discuss AI safety risks.

US equities slipped last night – S&P 500 (-0.5%); Nasdaq (-0.8%) – although the futures market is currently predicting a small rise at the open this afternoon. In Asia this morning, equities snapped a four-day losing streak: Nikkei 225 (+0.7%); Hang Seng (+0.1%); Shanghai Composite (+0.7%); Kospi (+1.4%).

The FTSE 100 is currently 0.4% higher at 10,702. Glencore has called the $2bn Radiant World claim in Singapore meritless and confirmed its exposure on its books to Radiant World and associated companies is not material to its financial position. Taking into account provisions already booked, Glencore’s exposure is well below its $500m threshold.

UK CPI was up 3.1% in August, a 5-month high, in line with expectations but up from 2.9% the previous month. The core rate was 2.6%. RPI was 3.4%. The data show a further impact from elevated energy prices filtering into the UK economy ahead of tomorrow’s Bank of England interest rate decision. With inflation above the BoE’s own 2.8% forecast, the probability of a hike has increased. 10-year Gilts currently yield 5.36%, while Sterling trades at $1.3480 and €1.1670.