(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

May 12 (Reuters) -

What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

With the month-old Iran war ceasefire now on "life support",

according to U.S. President Donald Trump, stock markets are

finding it harder to see past the renewed tensions between the

two sides.

As ever, oil prices have taken the possible resumption of

military action badly, with Brent crude rising back to around

$107 per barrel - some $10 higher than the lows of last week -

and year-end futures climbing back above $90/bbl.

I'll get into that and more below.

But first, check out my latest column on why world finance is

worried about Kevin Warsh's plans for the Fed.

And listen to the latest episode of the Morning Bid daily

podcast. Subscribe to hear Reuters journalists discuss the

biggest news in markets and finance seven days a week.

CEASEFIRE ON LIFE SUPPORT

While Wall Street hit new record highs yesterday, there's been a

notable step back in global equities today. Even the

high-flying, tech-heavy KOSPI index in South Korea recoiled,

albeit partly due to domestic jitters about windfall taxes on

AI-related profits.

The energy picture has created an anxious backdrop for the

release later today of the April U.S. consumer price report,

where forecasts already point to an acceleration in the headline

rate of inflation to near-three-year highs of 3.7%.

That makes for uneasy reading heading into big auctions of

10- and 30-year Treasury debt today and later in the week.

The bond market mood was rattled further by the latest twist

in the UK political drama.

Even though Prime Minister Keir Starmer insisted again today

that he would stay on as premier despite his party's poor

showing in UK local elections last week, key members of his

cabinet have reportedly urged him to set out a timetable for his

departure.

The uncertainty about what happens next and what a new PM might

mean for the direction of UK fiscal and economic policy saw

long-dated British gilt yields surge back to their highest level

since 1998, with sterling also slipping.

Elsewhere, the dollar was generally firmer and the yen slipped

even as U.S. Treasury Secretary Scott Bessent, who's visiting

Tokyo, seemed to endorse the Bank of Japan's efforts to

normalize monetary policy and stabilise the currency.

On the yen, Bessent said that "excess volatility is

undesirable, and we have been in close contact with the Ministry

of Finance, and we will stay in close contact with them."

Meantime, Federal Reserve Chair-apparent Kevin Warsh cleared a

key procedural hurdle in the U.S. Senate on Monday, moving him

closer to confirmation and a smooth handoff from outgoing Chair

Jerome Powell, whose term ends on Friday.

Chart of the day

U.S. consumer prices likely raced higher for a second straight

month in April, which would result in the largest annual

increase in inflation in more than 2-1/2 years and bolster

expectations that Federal Reserve interest rates will remain on

hold this year.

In the 12 months through April, the CPI is projected to have

advanced 3.7% - the biggest year-on-year increase since

September 2023 following a 3.3% rise in March. Aggravated by the

Iran-related oil shock, gasoline prices likely accounted for

most of the increase in the CPI last month after a record surge

in March.

Today's events to watch

* U.S. April CPI (8:30 a.m. EDT)

* U.S. 10-year note auction (1 p.m. EDT)

* New York Fed's John Williams and Chicago Fed's Austan

Goolsbee speak

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Opinions expressed are those of the author. They do not reflect

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