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

Dolan

Even as U.S. inflation missed forecasts again and Treasury debt

yields reared up in reaction, AI-fueled Wall St stock indexes

powered on regardless to record closing highs - either ignoring

the readout, or perhaps even thriving on it.

While economists sliced and diced the slightly

hotter-than-expected consumer price report for February, there

was little doubt about the bond market disappointment at least.

Although annual "core" CPI inflation fell again to 3.8% -

its lowest in almost three years - it was a tenth of a

percentage point above forecast, the headline inflation rate

ticked up surprisingly to 3.2% and monthly readings were sparky.

Many blamed statistical quirks in official models for the

early-year stickiness, with rent estimates and gasoline

exaggerating the data and services inflation excluding shelter -

closely watched by the Federal Reserve - better behaved.

But interest rate futures shaved expected Fed easing

expectations for the year nonetheless and both two and 10-year

Treasury yields pushed higher - the latter up by

more than 5 basis points to 4.15%, where it sat early on

Wednesday.

A poorly received 10-year note auction - partly because of

the CPI surprise - possibly goosed that move. And some $22

billion of 30-year bonds go under the hammer later on Wednesday.

But the artificial intelligence obsession in stocks was

reinvigorated by an AI-infused results beat from Oracle

, whose shares surged 12% as it said it was due to make

a joint announcement with AI bellwether Nvidia ( NVDA ).

Nvidia ( NVDA ) stock, in turn, recovered much of the past week's

losses and surged 7%.

What's more, shares in another AI darling, Arm Holdings

, the British chip designer backed by Softbank Group

, gained 2% as markets braced for increased trading

activity following the expiration of the lockup period tied to

its blockbuster initial public offering last September.

All of which helped lift S&P500 to a new closing high

despite the inflation cloud and futures held those gains on

Wednesday.

Although with markets still pricing Fed rate cuts even with

long-term inflation expectations settling above

its 2% target, there may be argument that stocks are beginning

to like an economy running slightly hot.

Bank of America on Tuesday upped its S&P500 profit growth

forecast for this year to 12%, backing its raised year-end

target for the index to 5,400.

Other more skeptical investors remain wary, with GMO's

Jeremy Grantham this week describing the AI "bubble" as "a new

bubble within a bubble."

Overseas, China's stocks slipped again on Wednesday -

dragged down by ailing property developers as Country Garden ( CTRYF )

missed a coupon payment on its debt.

The yuan also fell back sharply.

Japan's Nikkei index fell for a third straight

session as investors assessed the likelihood of a policy shift

at next week's Bank of Japan meeting.

With wage growth key to the BOJ decision, Toyota ( TM )

agreed to give factory workers their biggest pay increase in 25

years on Wednesday and that heightened expectations that bumper

pay raises will give the central bank leeway to tighten policy.

The dollar was up more broadly, however, and

dollar/yen nudged higher.

Bitcoin, which has trebled since September, continued

to surge above $73,000 ahead of next month's "halving" event.

In politics, U.S. President Joe Biden and former President

Donald Trump both clinched their parties' nomination on Tuesday,

kicking off the first U.S. presidential election rematch in

nearly 70 years.

Key diary items that may provide direction to U.S. markets later

on Wednesday:

* U.S. Treasury auctions $22 billion of 30-year bonds

* U.S. corp earnings: Lennar, Dollar Tree

* U.S. Secretary of Commerce Gina Raimondo visits Thailand

(By Mike Dolan, editing by Nick Macfie

[email protected])