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

columnist for Reuters.)

By Mike Dolan

LONDON, June 20 (Reuters) - What matters in U.S. and

global markets today

I'm excited to announce that I'm now part of

Reuters Open Interest (ROI)

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Last month's China-U.S. trade showdown turned world markets'

focus to Geneva, and that's where attention is yet again, only

this time for European talks with Iran, as President Donald

Trump has delayed a decision on direct U.S. involvement in the

Israel-Iran war to allow a two-week window for negotiations.

It's Friday, so I'll provide a quick overview of what's

happening in global markets and then offer you some weekend

reading suggestions away from the headlines.

Today's Market Minute

* Iran said on Friday it would not discuss the future of its

nuclear programme while under attack by Israel, as Europe sought

to draw Tehran back into negotiations and the United

States considers whether to get involved in the conflict.

* Investor unease about an increasingly uncertain environment is

rising, as Norway's shock rate cut on Thursday highlights how

U.S. tariffs, Middle East conflict and a shaky dollar make

global monetary policy and inflation even harder to predict.

* The Federal Reserve took a slightly hawkish turn on Wednesday,

indicating it is worried more about rising inflation than

slowing growth. But Chair Jerome Powell suggested this outlook

should be taken with a large grain of salt, writes ROI markets

columnist Jamie McGeever.

* The Israel-Iran conflict has boosted global diesel prices,

with gains outstripping the jump in crude prices, highlighting

the vulnerability of diesel-heavy European consumers even as the

region's refiners get a windfall. Read the latest from ROI

energy columnist Ron Bousso.

* UK finance minister Rachel Reeves insists higher economic

growth is her top priority, but the government's current plan to

address the country's chronically low investment is unlikely to

be ambitious enough. What may be needed is a structural rethink

of the finance ministry itself, argues Mike Peacock, the former

head of communications at the Bank of England.

Relief at two-week Middle East window

Even though U.S. markets were closed for the Juneteenth

holiday on Thursday, Wall St futures fell sharply during

the day as tensions over the Israel-Iran war boiled.

But those losses were mostly reversed before the market

re-opened on Friday after Trump gave Tehran a fortnight to come

up with a compromise before he decides whether to add U.S.

firepower to Israel's air attacks on Iranian nuclear

installations. Drone and missile attacks between the two warring

sides continue, however.

As is always the case with Middle East conflicts, the price

of oil is the lodestar. Iran is OPEC's third-largest producer.

U.S. crude came within a whisker of five-month highs on

Thursday before falling back today to just over $75 per barrel.

While a major concern, the rise in energy prices is still shy of

a "shock", with crude prices down 7% year-on-year despite the

tense situation.

Foreign ministers from Britain, France and Germany along

with the European Union's foreign policy chief were due to meet

their Iranian counterpart Abbas Araqchi in Geneva on Friday to

try to de-escalate the conflict.

If Trump goes to the wire with his decision about direct

U.S. involvement in the war, this will coincide with the

expiration of his 90-day pause on "reciprocal" tariff hikes

across the world, further fogging up the windscreen for world

markets.

Treasury yields were steady going into Friday's

open, as investors juggled the energy picture and this week's

relatively hawkish Federal Reserve meeting. The dollar fell back

from Thursday's highs.

While the median forecast from Fed policymakers is still two

interest rate cuts over the rest of the year, inflation

forecasts were nudged higher and 7 of the 19 central bankers now

expect no further easing in 2025.

But confident forecasting is next to impossible now for the

major central banks as they try to balance edgy oil prices,

uncertain tariff hikes and multiple geopolitical risks. The Bank

of England and Bank of Japan also left their key policy rates

unchanged this week, largely for those reasons.

Two rate cuts did emerge this week, however.

Swiss interest rates returned to zero as expected as the Swiss

National Bank battles the deflationary effects of currency

strength, largely due to the franc's "safe haven" appeal.

Norway surprised with a quarter point cut as well, taking the

heat out of an oil-driven crown that had hit two-year highs this

week.

Stock markets around the world rallied on

Friday as the oil price fell back, with Japan's Nikkei

bucking that trend and ending slightly in the red again.

A relatively thin trading session is expected on Wall Street

later following the holiday on Thursday, though unfolding events

in the Middle East will continue to create considerable

trepidation before the close. The Philadelphia Fed's June

business survey tops the data diary.

Next week's events are led by Fed boss Jerome Powell's

semi-annual congressional testimony on Tuesday and Wednesday and

the release of the Fed's favored inflation gauge - the personal

consumption expenditures measure - on Friday. A NATO summit in

The Hague on Wednesday adds to the geopolitical focus.

Elsewhere, sterling was firmer in the wake of the BOE

decision, even with a surprisingly poor UK retail sales readout

for May.

There was some marginally better news from UK public borrowing

numbers. While slightly above forecasts for May, the government

has borrowed 37.7 billion pounds over the first two months of

the 2025/26 fiscal year, less than the 40.7 billion pounds the

Office for Budget Responsibility had predicted.

In China, foreign direct investment from January to May fell

13.2% from the same period last year, more than had been

forecast.

And the European Union said it will bar Chinese companies from

participating in EU public tenders for medical devices worth 60

billion euros or more ($68.9 billion) per year after concluding

that EU companies are not given fair access in China.

Weekend reading suggestions

* MONETIZING DEBT: With no end in sight for outsize U.S.

deficits and debt accumulation, the Fed "will almost certainly"

be forced to monetize enough federal debt to prevent a default

at some point, according to former Bank of England policymaker

Willem Buiter and Professor Anne Sibert. Higher inflation and

interest rates "are all but assured", they wrote in a column on

Project Syndicate. "The Fed will have no choice but to engage in

sovereign debt purchases that it knows to be incompatible with

its monetary-policy objectives," they concluded. "The inflation

surge could be no more than three years away."

* EMOTIONAL FED?: Central bank communication is one of the most

closely watched signals by markets, but it is not just what is

said, but how it is said, argue economists Dimitris Anastasiou,

Apostolos Katsafados, Christos Tzomakas and Steven Ongena in a

paper on CEPR's VoxEU site. "Even subtle emotional cues can

shift expectations and pricing behaviour in financial markets,"

they wrote. "Portfolio managers, particularly in the banking

sector, may need to recalibrate models to include emotional tone

as a market-moving variable."

* US FIRMS MUSCLE IN: U.S. defense giants, backed by a

Congressional delegation, used this week's Paris Airshow to

showcase their cutting-edge technology and court European

partners as they seek to tap into the rising regional military

spending. Reuters' Joe Brock, Giulia Segreti, Paul Sandle and

Tim Hepher show how despite the pledges by many European nations

to boost military self-sufficiency, the continent remains

heavily reliant on U.S. defense firms such as Lockheed Martin,

Raytheon, Boeing, Anduril, Palantir and Elon Musk's SpaceX.

* G6-PLUS?: President Trump's early departure from this week's

G7 summit in Canada left the group without an overarching agreed

communique and raised questions about the future shape of the

group. Writing on the Chatham House site, the RIIA's economy and

finance director Creon Butler outlines different formats that

could be considered, including "G6-plus" without the full

attendance of the United States or "G7-plus" with invited guests

and limited issue-specific statements.

* REFINING OKLAHOMA: Nestled beneath Oklahoma's Wichita

Mountains sits a warehouse containing the only machine in the

United States capable of refining nickel, a crucial energy

transition metal now dominated by China. President Donald Trump

has said he wants to boost U.S. production of minerals and, as

Reuters' Ernest Scheyder shows, Oklahoma's push into minerals

processing marks a turn in efforts to wean America off Chinese

rivals. The state houses the country's only nickel refinery, its

largest lithium refinery, two lithium-ion battery recycling

plants, a rare earths magnet facility, and several electronic

waste collection facilities. That's more than in any other

state.

Chart of the day

During the parade of central bank meetings this week, Swiss

interest rates returned to zero, and Norway's central bank

surprised markets with a quarter point cut. Both decisions were

currency-related and have been influenced by the swooning dollar

and rising geopolitical tensions. The supercharged Swiss franc

has drawn safe-haven demand and threatens Switzerland with

deflation, as it flirts with 10-year highs against the green

back. The Norwegian crown is highly linked to the oil price and

hit its strongest level in two years this month as crude shot

higher on Middle East worries. The major central banks all held

the line, largely due to growing uncertainty over trade, oil

prices and war.

Today's events to watch

* Philadelphia Federal Reserve's June business survey (8:30

a.m. EDT), May leading indicator (10:00 a.m. EDT); Canada May

house prices, retail sales and producer prices (8:30 a.m. EDT)

* European foreign ministers meet Iranian counterpart in

Geneva

* European Union finance ministers meet in Luxembourg,

European Central Bank Vice President Luis de Guindos attends

* U.S. corporate earnings: Accenture, Kroger, Carmax, Vertex

Pharmaceuticals, Darden Restaurants

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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