Stocks struggled for headway on Wednesday while U.S. yields stood at or near decade highs along the curve as surging oil prices stoked inflation and set the scene for the Federal Reserve to project interest rates staying higher for longer.
Brent crude futures fell 1% in the Asia session and are off 10-month highs. But at $93.52 a barrel, prices remain up 30% in three months as Saudi Arabia and Russia reduce output.
Higher energy costs led to a bigger-than-expected spike in Canadian inflation, lifting the loonie on Wednesday and triggering selling in bond markets around the world.
Britain's CPI, though still high at 6.7%, unexpectedly slowed, with a sizeable fall in the pace of core price rises sending sterling down 0.4% to an almost four-month low at $1.2334.
Benchmark 10-year Treasury yields had hit their highest since 2007 at 4.371% overnight and were last at 4.36%.
S&P 500 futures dipped 0.1%. FTSE futures were down 0.3% and European futures were flat.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.7% with Hong Kong (.HSI) stocks the biggest drag as China left lending rates on hold.
All eyes are now on the Fed, with interest rate futures pricing implying almost no chance of a hike at 1800 GMT, leaving the focus to fall on the economic projections and Chair Jerome Powell's news conference.
"The previous dot plot saw many participants expecting a cut in 2024. There is no reason for those dots to significantly move," said Sam Rines, managing director at research firm CORBŪ in Texas.
"The 'risk management' aspect of the Powell presser is likely to be: positive in regard to downward adjustments to the policy rate as or if inflation wanes, (but) negative with respect to threats of future tightening."
The Fed meeting leads a week jammed with central bank meetings, with policy announcements in Sweden, Switzerland, Norway, Britain and Japan all due later in the week.
