US futures edge higher as the Fed prepares to hike rates, while 10-year Treasury yield smashes through 3%

• US futures rose on Tuesday along with bond yields as investors braced for the Fed's latest decision.
• The US central bank is expected to raise interest rates by 50 basis points on Wednesday.

US stock futures rose and the key 10-year Treasury yield smashed through 3% for the first time in over three years on Tuesday as investors braced for the Federal Reserve to hike interest rates again Wednesday.

S&P 500 futures were up 0.17%, Nasdaq 100 futures were 0.04% higher, and Dow Jones futures were up 0.16% as of 3.55 a.m. ET.

In Europe, the continent-wide Stoxx 600 index rose 0.8%. In Asia overnight, Hong Kong's Hang Seng ticked 0.07% lower while Tokyo's Nikkei 225 slipped 0.11%.

The Federal Reserve is widely expected to raise interest rates when it wraps up a two-day policy meeting Wednesday. Many investors are expecting the central bank to hike rates by 50 basis points, taking the target federal funds rate range to between 0.75% and 1%.

Some strategists have said the Fed could hike by as much as 75 basis points, as it tries to tackle the strongest inflation in more than 40 years. The Fed raised rates by 25 basis points in March, in the first increase since 2018.

Expectations that the Fed will hike rates have caused bond yields, which move inversely to prices, to surge in 2022. Investors demand a better return on bonds if they expect interest rates to be higher in the future.

The yield on the key 10-year US Treasury note rose past 3% for the first time since late 2018 Monday. It was up 11 basis points at 3.008% as of 3.55 a.m. ET Tuesday.

"On Wednesday, the Fed will debate a 75-basis point rate hike, but most likely settle on delivering a half-point interest rate hike," Edward Moya, analyst at trading platform Oanda, said.

Elsewhere in markets, oil prices wavered as the European Union moved closer to banning imports of Russian crude. Germany has dropped its opposition to a ban, but Hungary has been a vocal opponent.

Brent crude was down 0.71% to $106.82 a barrel. Meanwhile, WTI crude was 0.66% lower at $104.49 a barrel.

Stocks have fallen sharply in 2022, as investors have braced for central banks to end the easy-money policies of the coronavirus era. The S&P 500 was down 12.8% for the year as of Monday's close.