A look at the day ahead in U.S. and global markets by markets

correspondent Naomi Rovnick.

The ghosts of inflation past, present and future are

haunting global markets on Wednesday as the U.S. October

consumer prices report due later in the day threatens to raise

fears about what President-elect Donald Trump's tax and tariff

policies will bring.

Economists polled by Reuters expect U.S. year-on-year

inflation rose to 2.6% last month, adding to prospects of

high-for-longer interest rates that have sent two-year Treasury

yields to their highest since July as the dollar stands tall.

A potential return to the inflation angst that dominated

markets through 2022 and 2023 means the latest equity market

rally, driven by Trump's anticipated business deregulation and

tax cuts, looks vulnerable.

Asian markets sagged on Wednesday, Wall Street futures imply

another edge down from record levels hit last week and Europe's

Stoxx 600 share index is flat.

Bitcoin has eased about 0.8% after its post-election surge

close to $90,000.

The euro, one of the major victims of Trump

trades, is on course for its fourth consecutive daily drop on

Wednesday after briefly falling trade below $1.06, around its

weakest in a year.

But while markets are gripped by expectations Trump will

hike government borrowing and raise consumer prices with 60%

import tariffs on China, he could move more cautiously.

Voter anger about inflation, which rose about 20% in four

years, was one reason for Trump's resounding election and

sustained price rises could be politically toxic.

The President-elect also wants to slash what he views as

wasteful government spending and has tasked Tesla billionaire

Elon Musk with leading an efficiency drive.

Elsewhere in markets on Wednesday, a Japanese bond selloff

driven by rate hike expectations has taken five-year yields to a

15-year high and the yen has dropped beyond 155 per dollar,

around its weakest since July 30.

Sterling, almost 7% lower in two months, remains in the

spotlight ahead of finance minister Rachel Reeves and Bank of

England Governor Andrew Bailey's closely-watched Mansion House

speeches on Thursday.

Key developments that could influence markets on Wednesday:

-US CPI (Oct)

-Dallas, St Louis, Kansas City Fed chiefs speak at separate

events

-BoE's Catherine Mann speaks

(Editing by Christina Fincher)