LONDON, Aug 14 (Reuters) - What matters in U.S. and

global markets today

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

Spurred on by the U.S. President and Treasury Secretary,

expectations for interest rate cuts are reaching a fever pitch,

with markets now starting to price in a small chance of a half

point cut as soon as next month as they await today's producer

price report.

On Wednesday, Scott Bessent said downward revisions to the

U.S. payrolls meant the Federal Reserve needed to play catch-up.

He said there was a "very good chance" of a 50 basis point

reduction in September and that rates should "probably" be

150-175 bps lower.

* Wall Street zoomed to new records on Wednesday, but stock

futures stepped back a touch ahead of the PPI report but

two-year Treasury yields continued to stalk three-month lows.

Even though many Fed officials are still cautious about the

prospects for a half point cut, Wall Street banks are starting

to forecast as many as three cuts this year, arguing softer jobs

growth, a lack of "pass-through" from tariffs to consumer

prices, and a new appointee to the Fed board will tip the

balance.

* Thursday's producer price update for July will be important as

details feed into the Fed's favored PCE inflation gauge. Annual

headline and core PPI inflation are expected to pick up to 2.5%

and 2.7%, respectively. Meantime, President Donald Trump said

his pick for the next Fed Chair would be named "a little bit

earlier" and he'd narrowed it down three or four names, despite

indications earlier on Wednesday that as many as a dozen names

had been considered.

* Elsewhere, the inflation picture softened further given this

week's slide in crude oil prices to two-month lows ahead of the

critical U.S.-Russia summit in Alaska tomorrow. Japan's yen

jumped to three-week highs, knocking the Nikkei stock index back

sharply from record highs, as Bessent also said the Bank of

Japan was "behind the curve" in tackling inflation there.

Sterling hit six-week highs on the euro after the release of

above forecast UK GDP data. Finally, riffing off the week's

heady surge in risk appetite and rate cut bets, Bitcoin jumped

to a new record high at $124,481.

Make sure to check out today's column, where I discuss why

political pressure on government statisticians and private

forecasters risks sending markets down a rabbit-hole.

Today's Market Minute

* U.S. President Donald Trump threatened "severe consequences"

if Russia's Vladimir Putin does not agree to peace in Ukraine

but also said on Wednesday that a meeting between them could

swiftly be followed by a second that would include the leader of

Ukraine.

* The announcement of the results of a U.S. probe into

pharmaceutical imports and new sector-specific U.S. tariffs

likely remains weeks away, four official and industry sources

said, later than initially promised.

* Investors are increasingly pricing in a "higher for longer"

interest rate environment in the euro zone, with a potential cut

in March seen as a temporary blip before borrowing rates climb

back above 2%.

* OPEC+ is widely believed to be pivoting from trying to bolster

prices to rebuilding market share, but a recent decision by

Saudi Arabia seems to be at odds with this strategy. Read the

latest from ROI columnist Clyde Russell.

* It's widely believed that U.S. President Donald Trump's

insistence on lower interest rates is what's making life most

difficult for Federal Reserve Chair Jerome Powell and his

colleagues. But ROI columnist Jamie McGeever argues that what's

causing the biggest headache for Fed officials is probably more

prosaic: economic data.

Chart of the day

As Trump prepares to meet Russian President Vladimir Putin on

Friday on prospects for ending the Ukraine war, the legacy of

the conflict on the global economy is assessed. The added

inflation fallout from 2022's invasion and energy price spike

has dissipated largely but the United States emerges from the

period with the highest inflation rate of the Group of Seven

major economies.

Today's events to watch

* U.S. July producer price report (8:30 AM EDT) weekly

jobless claims (8:30 AM EDT)

* Richmond Federal Reserve President Thomas Barkin speaks

* U.S. corporate earnings: Applied Materials, Tapestry,

Amcor, Deere

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