LONDON (Reuters) - What matters in U.S. and global markets today

The dollar and U.S. Treasuries found their footing on Tuesday after a rough start to the week, but stocks remained edgy due to a mix of trade war concerns and spluttering factory activity.

I'll discuss this and all of today's market news below. And for today's deep dive, I'll explain why market fears are growing that the 'new cold war' could be turning hot.

Today's Market Minute

* Dutch far-right leader Geert Wilders' PVV party left the governing coalition on Tuesday, in a move that is set to topple the right wing government and will likely lead to new elections.

* Saudi Arabia and Russia had to reach a difficult compromise on OPEC+ policies on Saturday as Riyadh pushed to accelerate oil output increases while Moscow argued for a pause, four OPEC+ sources with knowledge of the talks said.

* Surging government debt levels are becoming a pressure point for big economies and bond investors have their sights on those not doing enough to improve their finances.

* BP has jumped from crisis to crisis in recent years, severely eroding its stature as one of the world's leading oil companies. The British firm may finally need to accept that it is no longer a true oil major and can't keep managing cash like one. Read the latest from Reuters columnist Ron Bousso.

* Headwinds from tariffs, bond yields and 'stagflation' are gathering force, but corporate America could not be in better shape to face the economic storm that may be building. Read the latest from Reuters columnist Jamie McGeever.

Trump and Xi's big chat

The weekend saw testy bilateral exchanges between Washington and Beijing, as well as a doubling of U.S. steel tariffs to 50%. But hopes for some easing in Sino-U.S. tensions were stoked by news that President Donald Trump and Chinese leader Xi Jinping were scheduled to hold a call as soon as this week.

If they jump on the phone this Thursday, they could rope in German Chancellor Friedrich Merz - who will be meeting Trump that day in Washington - for a trilateral discussion among the world's three biggest economies.

There's clearly some urgency in Washington to get bilateral talks on track with time running out on its 90-day pause of reciprocal tariffs imposed on April 2.

A draft letter sent to negotiating partners showed the Trump administration wants countries to provide their best offer on trade negotiations by Wednesday as officials seek to accelerate talks with multiple partners. Perhaps pointedly, European Union sources said they had not received the letter.

Meanwhile, the tariff war's negative impact on global manufacturing is starting to show. 

U.S. factory activity contracted for a third straight month in May, and suppliers took the longest time in nearly three years to deliver inputs, potentially signalling looming shortages of some goods. The reading was the lowest in six months and missed expectations.

Additionally, China's factory activity in May shrank for the first time in eight months, a private-sector survey showed on Tuesday, indicating U.S. tariffs are now starting to directly hurt the manufacturing superpower.

The Organisation for Economic Cooperation and Development's latest global outlook, meantime, now expects world growth to slow more than the group expected only a few months ago, as the fallout from the trade war takes a toll on the U.S. economy.

The slowing economic pulse helped keep a lid on Treasury yields, with 30-year bonds falling below 5% again. 

And the greenback perked up from Monday's six-week lows.

Helping to drive both those moves were surprisingly soft euro zone inflation numbers for May, which increased the likelihood of another European Central Bank interest rate cut this week - and possibly more ahead.

Headline euro zone inflation fell below the ECB's 2% target last month, slowing to 1.9% from 2.2% in April. That was below forecasts, amid falling oil prices and service sector inflation as well as the strong euro. Core rates dropped sharply to as low as 2.3%. 

Next up is this week's sweep of U.S. labor market reports. April job openings due out later on Tuesday are expected to slip further from last month.

Ahead of the open, U.S. stock futures were back in the red after the S&P 500's late session recovery on Monday, led in part by big tech and oil stocks. 

Crude oil prices sustained the bulk of Monday's gains after the OPEC+ meeting this weekend resulted in less significant output hikes than feared.

Taiwan's TSMC, meantime, said on Tuesday that even though U.S. tariffs were having some impact on the company, it is continuing to benefit from the strong demand for artificial intelligence tools.

Be sure to check out today's column, where I look into the increasingly bellicose political rhetoric around the world, as countries engage in a new arms race and multiple conflicts escalate.  

Today's events to watch

* U.S. April factory goods orders (10:00 AM EDT) U.S. April JOLTS job openings (1000EDT)

* Federal Reserve Board Governor Lisa Cook, Dallas Fed President Lorie Logan and Chicago Fed President Austan Goolsbee speak;

* U.S. corporate earnings: Crowdstrike, Hewlett Packard, Dollar General

* OECD Ministerial Council Meeting 2025 in Paris

* Italy's Prime Minister Giorgia Meloni meets French President Emmanuel Macron in Rome 

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

($1 = 0.8738 euros)