Trump’s tough stance on Iran sends oil prices surging, markets hold breath awaiting Federal Reserve signals.

U.S. stocks opened lower on Wednesday, amplifying market pressure ahead of the Federal Reserve’s interest rate decision later in the session. Negative sentiment was driven primarily by a sharp rise in oil prices, after Donald Trump told Fox News in an interview that the U.S. would launch a strong strike against Iran in response to a recent attack targeting personnel in the Middle East. The 10-year U.S. Treasury yield edged up to 4.62%, approaching its year-to-date high. The 2-year U.S. Treasury yield—more sensitive to Fed policy decisions—rose by around 3 basis points to 4.3%, also near its year-to-date peak. Traders widely hope the Federal Reserve, led by Chair Powell, will signal that it views the oil price shock from tensions with Iran as temporary and will not rush to raise interest rates this year. However, some argue that a single rate hike would be reasonable, and would help calm the long end of the yield curve by demonstrating the Fed’s resolve to curb inflation.