Fed looks certain to raise rates

CALL it hike-o-phobia. The Federal Reserve has not raised rates in almost 10 years but looks almost certain to do so on Wednesday. The proximity of higher interest rates has sent commodities, currency and stock markets into a state of anaphylactic shock reminiscent of the financial crisis.

There's even a slim chance that the seeds of another financial crisis have been sown, as a collapse in high-yield bonds of distressed oil drillers threatens to freeze up the whole junk-bond market.

The latest drop in the oil price, from, about US$40 a barrel before the latest meeting of the Organization of the Petroleum Exporting Countries (Opec) to about US$35 a barrel at the end of last week, has set off a chain of tumbling dominoes in financial markets. Opec he…