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

columnist for Reuters.)

By Mike Dolan

LONDON, May 9 (Reuters) - What matters in U.S. and

global markets today

By Mike Dolan, Editor-At-Large, Financial Industry and Financial

Markets

It's Friday, so today 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

* Behind closed doors, Chinese officials have grown increasingly

alarmed about the U.S. tariffs' impact on their economy and the

risk of isolation as China's trading partners have started

negotiating deals with Washington.

* From his first moments on the balcony of St. Peter's Basilica,

Pope Leo XIV gave three important clues about what kind of

leader of the 1.4-billion-member Catholic Church he will be.

* U.S. President Donald Trump and British Prime Minister Keir

Starmer on Thursday announced a limited bilateral trade

agreement that leaves in place Trump's 10% tariffs on British

exports, modestly expands agricultural access for both countries

and lowers prohibitive U.S. duties on British car exports.

* While many investors survived the market volatility unleashed

by U.S. President Donald Trump's "Liberation Day" with only a

few scratches, macro hedge funds suffered one of their worst

maulings in years. Check out the latest from Reuters' columnist

Jamie McGeever.

* Forget April, it's this summer that could prove decisive as

investors seek to determine if this shift is a short-term move

or a true secular change in market leadership. Read the analysis

from TPW founder Jay Pelosky.

Tariff rollback hopes rising

World markets have latched onto the prospect of a gradual

rollback of U.S. tariffs to extend their recent recovery from

April's trade shock.

Even though it appears the universal 10% levies leveled on all

countries' imports to America will remain regardless of

bilateral talks underway, there is still some optimism that many

of the more extreme 'reciprocal' tariffs may be negotiated away.

Britain's trade deal with Washington on Thursday encouraged

those hopes, and investors will be paying close attention to the

U.S.-China talks set to begin in Switzerland this weekend.

Wall Street rallied again on Thursday, with the dollar

surging to its best levels in a month and U.S. Treasury yields

hitting their highest in two weeks. Oil prices

gained, the VIX 'fear index' ebbed to the lowest since

April 2 and Bitcoin recaptured the $100,000 level to hit

its highest since January.

U.S. stock futures held those gains overnight and

equities surged in Japan and Taiwan. MSCI's all-country stock

index is back in positive territory for the year

to date, even though Wall Street indexes remain in the red for

2025.

Tech gains have helped. Nvidia ( NVDA ) plans to release a

downgraded version of its H20 artificial intelligence chip for

China in the next two months, following U.S. export restrictions

on the original model, sources told Reuters.

But ahead of the weekend talks in Switzerland, China reported a

surprisingly big beat in worldwide exports for April as demand

from countries seeking to capitalise on the 90-day tariff pause

offset a 21% drop in Beijing's bilateral exports to America.

Even that decline in exports to the United States surprised

forecasters, who had expected a greater drop given the 145%

direct tariffs imposed on China. This suggests many U.S.

importers couldn't switch suppliers easily and may have to pass

on the higher costs to consumers. This could spur worries about

rising consumer prices and put upward pressure on Treasury

yields.

Friday's diary sees a parade of top Federal Reserve

officials speaking following this week's Fed decision to hold

policy rates steady as the central bank waits to see how the

trade and inflation picture pans out. April inflation updates

are due next week.

President Donald Trump wasted little time in resuming his

stinging criticism of Fed Chair Jerome Powell on Thursday,

calling him a "fool" for not lowering interest rates.

Vice President JD Vance added to the attacks, saying Powell

has "been wrong about almost everything."

Thursday's $25 billion sale of 30-year Treasury bonds

jarred in the backdrop. The auction's 2.31

bid-to-cover ratio, a gauge of demand, was the lowest since July

2024 and the 58.9% awarded to indirect bidders, which include

foreign investors, was the lowest since 2019.

Elsewhere, UK stocks advanced again as investors

digested the runes of Thursday's U.S. trade deal and the Bank of

England's quarter-point rate cut.

With BoE policymakers surprisingly split on the cut, markets

pulled back expectations of further easing this year, and BoE

boss Andrew Bailey underlined the fact that tariffs are still

set to rise despite the concessions in Thursday's trade deal.

But key parts of the trade deal, particularly how it

sidestepped any compromise on food standards, will allow Britain

to more easily engage in parallel negotiations with the European

Union this month.

Weekend reading suggestions

Here are some articles away from the day-to-day headlines

that you may find interesting.

* SUDDEN STOP?: The Institute of International Finance shows

portfolio investment flows to the emerging markets came to a

standstill in April as the United States tabled trade tariffs

across the world and global markets plunged. Only flows to

Chinese debt were positive during the turbulent month, with

equity flows across China and EM at large in the red and debt

flows negative to EM ex-China countries too.

*MOVIE SURPLUS: After President Trump said he would impose 100%

U.S. import tariffs on movies made abroad, Gary Hufbauer at the

Peterson Institute for International Economics wrote that he

thinks the plan should be canceled. Hufbauer argues that

retaliation against Hollywood and related services could slash a

$37 billion U.S. trade surplus in overall entertainment and

would invite countries to retaliate not only against Hollywood

but also against all types of U.S. services, including those

provided by the likes of Google and Amazon.

* KINDLEBERGER TRAP?: In an article for CEPR's VoxEU website,

central bank adviser and author Robert McCauley addresses an

unlikely but widely discussed risk that a re-vamped Federal

Reserve might be unwilling to extend emergency dollar credit via

global swap lines.

* MIDEAST GAMBLE: President Trump reportedly blindsided Israeli

Prime Minister Benjamin Netanyahu last month with a gamble on

opening negotiations with Iran. Reuters' Samia Nakhoul, Humeyra

Pamuk and Parisa Hafezi report on how the success of those talks

hinges on winning a handful of key concessions to stop the

Islamic Republic from developing a nuclear bomb.

* UNEQUAL AGEING: Detailing the scale of Europe's demographic

challenge, a report from the Bruegel think tank by David Pinkus

and Nine Ruer shows that by 2050 working-age populations are

projected to decline in 22 out of 27 European Union countries.

But they point out that the scale of the problem is far greater

in Eastern and Southern countries, as higher migration to

Northern and Western economies bolsters those populations.

* FLAWED 'ACCORD'?: In a piece for the Project Syndicate

website, former International Monetary Fund chief economist Ken

Rogoff critiques proposals by members of Trump's economic team

to reduce the U.S. current account deficit by weakening the

dollar. He argues the so-called 'Mar-a-Lago Accord' idea is

based on a deeply flawed understanding of the relationship

between the dollar's global status and U.S.

de-industrialization.

* TRILLION-DOLLAR UPGRADE: Europe's ageing power grid and

limited energy storage capacity mean that the continent will

need to invest trillions of dollars to cope with rising green

energy output and increasing electricity demand and to avoid

blackouts. Reuters Nina Chestney examines the issue in light of

Spain and Portugal's worst ever blackout last month.

* 'TRUMP TRADE' HEAD FAKE: In a blog on the Council on Foreign

Relations website, former U.S. Treasury official Brad Setser

runs through a number of theories as to why currency markets got

it wrong so far in betting that Trump's tariff policies would

strengthen the dollar.

* LEGAL BACKLASH: As federal judges rule against the Trump

administration in dozens of politically charged cases, the

families of at least 11 of the jurists have been targeted with

threats and harassment. A Reuters Special Report details the

pressure put on some U.S. judges and their families by

supporters of the President.

Chart of the day

Trade talks between the world's two largest economies will

begin in Switzerland this weekend. Ahead of those talks, China

reported that its exports in April were far ahead of forecasts

despite the imposition of 145% U.S. tariffs. The unexpected

buoyancy partly reflected demand for materials from overseas

manufacturers who rushed to send out goods in order to make the

most of 90-day tariff pause. However, China's direct exports to

the U.S. fell 21%, which means the trade surplus with the U.S.

dropped to $20.5 billion from $27.6 billion in March.

Today's events to watch

* Canada April employment report

* U.S. Treasury Secretary Scott Bessent meets Swiss

government officials ahead of weekend trade talks with China in

Switzerland

* Federal Reserve Board Governors Christopher Waller, Lisa

Cook, Adriana Kugler and Michael Barr all speak. New York Fed

President John Williams, Cleveland Fed President Beth Hammack,

St. Louis Fed chief Alberto Musalem, Richmond Fed chief Thomas

Barkin and Chicago Fed boss Austan Goolsbee all speak. Bank of

England Governor Andrew Bailey and BoE chief economist Huw Pill

speak

* U.S. corporate earnings: Monster Beverage, AMC, Echostar

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.