Global Markets-Shares drop in Asia as oil rises, rate hikes loom

Yields on 10-year Treasury notes US10YT=RR were stuck at 4.974%, having been sold heavily in recent weeks. Just last week alone, 2-year yields rose a steep 26 basis points, while 10-year yields added 19 basis points as the curve flattened.

Ben Snider, chief U.S. equity strategist at Goldman Sachs, said strong corporate earnings should provide support for Wall Street if borrowing costs rise.

"Equities typically struggle when the Fed starts to hike rates, but we expect the bull market to continue," he added. "The S&P 500 has generated an average three-month return of -2% at the start of seven hiking cycles during the last few decades."

"Yet the S&P 500 has generated an average return of +9% during the 12 months following the first hike."

Markets also imply around a 76% chance the Bank of Japan will lift its cash rate by a quarter point, to 1.25%, when it meets on Friday. The BOJ is also expected to sound hawkish on further tightening as it struggles to prevent a relapse in the yen after market intervention helped to pull it from a 40-year low.