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

columnist for Reuters.)

By Mike Dolan

LONDON, July 16 (Reuters) - What matters in U.S. and

global markets today

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

U.S. long-bond rates have climbed back above 5% with the June

consumer price report showing signs of tariff-related inflation,

agitating global bond markets anew in an edgy week for

government debt.

I'll get into this and the rest of today's market news below.

Make sure to check out my column today, where I discuss how the

dollar's sharp decline may simply have replaced one bubble with

another.

Today's Market Minute

* China's economy posted robust 5.2% growth in the second

quarter, showing its export-heavy model has so far withstood

U.S. tariffs. But beneath the headline resilience, cracks are

widening.

* Britain's annual rate of consumer price inflation unexpectedly

rose to its highest in over a year at 3.6% in June, official

figures showed on Wednesday, potentially making it a tougher

call for the Bank of England to cut interest rates next month.

* Rising prices in the U.S. across an array of goods from coffee

to audio equipment to home furnishings pulled inflation higher

in June in what economists see as evidence of the Trump

administration's increasing import taxes passing through to

consumers.

* U.S. President Donald Trump's threat to choke off Russia's oil

revenue via secondary sanctions would deal a hammer blow to

Moscow's finances, but as ROI energy columnist Ron Bousso

claims, markets are betting that the risk of higher energy

prices will keep Washington from following through.

* The astonishing rebound in stocks since early April largely

reflects investors' bet that U.S. President Donald Trump won't

follow through on his tariff threats. But ROI columnist Jamie

McGeever says that the market's very resilience may encourage

the president to push forward, which could be bad news for

equities in both the U.S. and Europe.

Tariff inflation irks bonds

As the headlines hit on Tuesday, the CPI report looked

reasonably contained. Core inflation increased at a 2.9% annual

rate in June, slightly below the 3% forecast even if a little

faster than in May. Top-line inflation accelerated to a

higher-than-expected 2.7% from 2.4% the previous month.

But rising prices across an array of goods, from coffee to audio

equipment to home furnishings, were seen as worrying evidence

that import tax hikes were indeed passing through to households

- reinforcing Federal Reserve caution in cutting rates, not

least with much wider tariff moves due next month.

The producer price report on Wednesday will hold that take

up to the light again.

Fed futures shifted to reduce the chances of another Fed

rate cut as soon as September to little more than 50%, and

full-year easing bets were pared back to as low as 42 basis

points.

"My base case is that we'll need to keep interest rates modestly

restrictive for some time to complete the work of returning

inflation sustainably to the 2% target," Dallas Fed boss Lorie

Logan said on Tuesday, with debate largely hinged on whether

tariff hikes would amount to one-off inflation jolts or be a

persistent aggravator.

The Fed stance comes amid repeated attacks on Chair Jerome

Powell from President Donald Trump, who insisted again on

Tuesday that rates should be cut by at least 300 bps

immediately.

Political pressure on the Fed is starting to unnerve many on

Wall Street.

Speaking after the bank's results on Tuesday, JPMorgan ( JPM ) boss

Jamie Dimon said Fed independence was "absolutely critical".

"Playing around with the Fed can often have adverse

consequences, absolutely opposite of what you might be hoping

for," Dimon said.

Even though global investors see Treasury Secretary Scott

Bessent as favorite to get the nod as new Fed Chair once

Powell's term ends next year, Trump doused that by saying: "I

like the job he's doing."

U.S. Treasuries reacted badly to the CPI, meanwhile, with

30-year yields recapturing the 5% handle they last topped back

in May, while 10-year yields hit their highest in over a month

at just shy of 4.5%. Ten-year inflation expectations of 2.4%

crept to their highest since March.

The darkening Fed horizon knocked the S&P 500 back into the red

- even as Nvidia's ( NVDA ) resumption of AI chip sales to China

lifted both its stock and the tech-heavy Nasdaq to new

records.

But, in a resumption of its link with yields that seemed

periodically absent during a torrid first half of the year for

the greenback, the U.S. dollar rallied with Treasury

rates, most obviously to its highest level against Japan's yen

since April 2's tariff shock.

While Tuesday's focus was on the tariff-related inflation hit to

Treasuries, it's been a rough week for government bonds

everywhere - especially in Japan as long-term yields there hit

new highs this week ahead of the July 20 upper house election

and related fiscal policy worries.

With Prime Minister Shigeru Ishiba's shaky minority government

beholden to an array of opposition parties, the rise in support

for a small new 'Japanese First' party, Sanseito, could become a

factor in the election outcome.

JGB yields pulled back on Wednesday, however, and relieved some

of the pressure. French and German government debt yields also

retreated slightly from three-month highs after a series of

French budget cuts were announced the previous day.

But Britain was faced with its own bout of renewed inflation

angst as the June annual CPI rate raced well above forecasts to

3.6% - casting some questions over the timing of further Bank of

England monetary easing.

Sterling was steady, but five-year gilt yields

hit a one-month high and 30-year gilt yields hit their highest

since May.

Back on Wall Street, the second-quarter earnings season started

on a somber note on Tuesday.

JPMorgan ( JPM ) slipped despite raising its 2025 net

interest income outlook, while Wells Fargo ( WFC ) fell even as

its profit rose on reduced loan-loss reserves. BlackRock ( BLK )

notched a new milestone for assets under management, yet its

shares slid too.

Bucking the trend, Citigroup ( C/PN ) climbed after its traders

delivered a windfall that boosted second-quarter profit.

Morgan Stanley and Goldman Sachs ( GS ) are among those reporting

on Wednesday.

In Europe, ASML fell almost 7% earlier on Wednesday

after the world's biggest supplier of computer chip-making

equipment warned that it may not achieve growth in 2026, even

after its second-quarter bookings beat market expectations.

Chart of the day

The rising price of U.S. household furnishings, along with

other categories such as recreational goods, apparel and outdoor

equipment in the consumer price basket, has been spotlighted in

the June inflation report as a worrying sign of tariff-related

price jumps that could elevate the overall inflation rate

through the rest of the year. That's especially so if another

wave of tariff rises are due next month. All year, Fed officials

have cited tariff-related uncertainty on the inflation front as

a key reason for caution in further lowering interest rates.

Today's events to watch

* U.S. June producer price report (8:30 AM EDT); June

industrial production (9:15 AM EDT); Federal Reserve 'Beige

Book' release of economic conditions

* U.S. corporate earnings: Bank of America ( BAC ), Morgan Stanley,

Goldman Sachs ( GS ), PNC, M&T, United Airlines, Johnson & Johnson ( JNJ ),

Progressive, Kinder Morgan ( KMI ), Prologis ( PLD )

* Fed Board Governor Michael Barr, New York Fed President

John Williams, Cleveland Fed President Beth Hammack and Richmond

Fed chief Thomas Barkin all speak

* German Finance Minister Lars Klingbeil and French

counterpart Eric Lombard hold joint press conference in Berlin

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