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

columnist for Reuters.)

By Mike Dolan

LONDON, June 23 (Reuters) - What matters in U.S. and

global markets today

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Reuters Open Interest (ROI)

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In this latest round of Middle East violence, the oil price has

been remarkable as much for what it hasn't done as for what it

has. Oil prices initially rose this morning following the U.S.

strike on Iran over the weekend, but crude has since given back

all these gains.

I'll discuss this and the rest of the market news below, and

then in today's column, I ask why markets are remaining

surprisingly calm despite mounting U.S. debt concerns.

Today's Market Minute

* Iran said on Monday that the U.S. attack on its nuclear sites

expanded the range of legitimate targets for its armed forces

and called U.S. President Donald Trump a "gambler" for joining

Israel's military campaign against the Islamic Republic.

* The U.S. bombing injected fresh uncertainty into the outlook

for inflation and economic activity at the start of a week chock

full of new economic data and central banker commentary,

including two days of Congressional testimony from Federal

Reserve Chair Jerome Powell.

* Utilities in the developed world are stressing over how to

keep up with demand from data centres and artificial

intelligence searches. But globally, keeping people cool is

likely to be a much bigger drain on electricity grids and a more

pressing power sector challenge. Read the latest from ROI global

energy transition columnist Gavin Maguire.

* The escalation of the Middle East conflict could lead Tehran

to disrupt vital exports of oil and gas from the region,

sparking a surge in energy prices. But as ROI energy columnist

Ron Bousso says, history tells us that any disruption would

likely be short-lived.

* Several recent global developments have sparked some of the

highest levels of uncertainty in decades. ROI outside

contributor Joachim Klement claims equity investors seeking

clarity should be careful what they wish for.

Oil keeps calm, MidEast conflict carries on

With global stock and bond markets using crude as a lodestar for

how they react to the Iran crisis, the remarkably quick reverse

and decline in U.S. oil prices on Monday have seen U.S.

and European equities rally following the weekend events.

Wall Street futures were up about 0.25% ahead of Monday's

bell. European and Chinese were

higher too, with Japan's Nikkei bucking the trend even

as the yen weakened. Mostly due to the yen slide, the

dollar index was firmer.

U.S. President Donald Trump said he had "obliterated" Iran's

main nuclear sites in strikes over the weekend, joining an

Israeli assault in an escalation of conflict in the Middle East

as Tehran vowed to defend itself. Trump then openly hinted at

'regime change' in his social media posts on Sunday.

U.S. crude prices initially jumped above $78 per barrel to

their highest since January, but quickly fell back below

Friday's close to trade below $74 - more than $6 below the high

for this year and down 11% on levels seen a year ago. Brent

prices are down on the day too.

While the escalating conflict surrounding Iran has turned

unpredictable, it happens in a market where global space oil

production capacity is running in excess of 4 million barrels a

day - an oversupply expected to persist through the end of next

year at least.

What's more, outsize bets on the direction for oil linked to the

outcome of the Iran war are frustrated by numerous binary

outcomes - including both the survival of the Tehran government

and even possible mining of the Straits of Hormuz. While the

latter could stymie shipping in the region for a bit, it's not

clear how long it could be enforced.

With global demand set to ebb later this year, due in part

due to the growth-dampening effects of U.S. trade tariffs, and

U.S. production set to increase, speculative oil price punts are

very risky.

With oil prices still largely under wraps, the fallout for

U.S. Treasuries is similarly limited.

With one eye on Federal Reserve chief Jerome Powell's

semi-annual Congressional testimony on Tuesday and series of

debt auctions during the week, 10-year yields

remained stuck in recent ranges about 4.4%.

Trump on Friday again floated the idea of firing Powell.

"I don't know why the Board doesn't override (Powell),"

Trump wrote in a lengthy post on Truth Social criticizing Fed

policy. "Maybe, just maybe, I'll have to change my mind about

firing him? But regardless, his Term ends shortly."

San Francisco Fed President Mary Daly said on Sunday that

U.S. central bank should consider giving less forward guidance

about its monetary policy intentions, particularly in uncertain

times. "Words have power, which is a great tool. But words can

be harder to reverse than the interest rate," she said.

The economic data calendar homes in on June business

surveys, with the flash versions of U.S. soundings from S&P

Global due out later in the day.

Overall euro zone business activity expanded only modestly in

June, with a small improvement in the dominant services industry

offsetting more downbeat manufacturing.

The services PMI nudged up to sit right on the break-even 50

mark up from May's final reading of 49.7. Optimism among

services firms increased and the business expectations index

bounced to a four-month high of 57.9 from 56.2.

European Central Bank boss Christine Lagarde testifies at

the European Parliament later in the day.

Economic surprise indexes, capturing how incoming economic

readings are above or below expectations overall, show a sharp

divergence between Europe and the United States - with the euro

zone index at its most positive since May and the U.S.

equivalent at its most negative in nine months.

Elsewhere, Bitcoin was sharply lower over the

weekend, while gold prices also fell back early on

Monday.

Chart of the day

Relatively quick reversals of oil price spikes were largely

thanks to the ample spare production capacity - and also due to

the fact that any rapid oil price increase curbs demand in turn.

The current global oil market certainly has spare capacity.

OPEC+, an alliance of producing nations, today holds around 5.7

million barrels per day in excess capacity, of which Saudi

Arabia and the United Arab Emirates hold 4.2 million bpd.

Although there are concerns about closing of the key Straits of

Hormuz waterway, the two Gulf powers could bypass it by oil

pipelines. Saudi produces around 9 million bpd and has a crude

pipeline that runs from the Abqaiq oilfield on the Gulf coast in

the east to the Red Sea port city of Yanbu in the west. The UAE,

which produced 3.3 million bpd of crude oil in April, has a 1.5

million bpd pipeline linking its onshore oilfields to the

Fujairah oil terminal that is east of the Strait of Hormuz.

Today's events to watch

* Flash U.S. June business surveys from S&PGlobal (0945EDT)

May existing home sales (1000EDT)

* Federal Reserve Board Governor Christopher Waller, Fed

Board Governor Adriana Kugler, Fed Vice Chair for Supervision

Michelle Bowman, and Chicago Fed President Austan Goolsbee all

speak. European Central Bank President Christine Lagarde speaks

to European Parliament (0800EDT)

* EU-Canada summit takes place in Brussels

* U.S. Treasury sells $58 billion of 3-year notes

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.

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