July 15 (Reuters) - A look at the day ahead in U.S. and

global markets from Mike Dolan

The shock shooting on Saturday of former President Donald Trump,

who is seeking a return to the White House, is reverberating

around world markets, with bets that the incident boosts his

re-election chances steepening the Treasury yield curve and

lifting stock futures first thing.

The full implications of the gun attack on Trump, who

escaped with a minor injury to his ear to head to the Republican

convention in Milwaukee on Monday, may take some time for the

country and investors to absorb.

But for now the simple conclusion is that the shooting

likely increases Trump's already considerable chances of

returning to the White House after November's election.

For most analysts trying to parse that for markets, that ups

the chances of tax cut extensions and higher trade tariffs -

leading to even higher U.S. fiscal deficits, even alongside

potential growth headwinds and intense political pressure on the

Federal Reserve to ease as inflation continues to subside near

term.

Some also suspect a possible withdrawal of U.S. support for

Ukraine would also up fiscal pressures in Europe, who may then

have to pick up the entire financial bill left by an American

retreat.

With U.S. equities expected to benefit initially from

tariffs, tax cuts and a possible spur to re-shoring of

manufacturing, already record high stocks tend to be called

higher on the increased prospect of a Trump win too.

So first thing Monday - with betting markets now putting

chances of a Trump election win close to 70% - U.S. stock

futures were higher and the 2-to-30-year Treasury yield

curve briefly turned positive for the first time

since January.

The two-year-old yield curve inversion from two to 10 years,

meantime, also squeezed to narrowest since January at just 23

basis points.

Fed chair Jerome Powell speaks in Washington later.

With short-term yields still falling in the slipstream of

last week's surprising disinflation news, and futures now fully

priced for a first Fed rate cut in September, but long-term

yields edging higher regardless, the curve was clearly riffing

off the Trump incident.

Bitcoin's jump back above $60,000 for the first time

in a couple of weeks was seen as another related reaction.

And most obvious of all perhaps, Trump Media & Technology

Group ( DJT ) - majority owned by Trump - surged 63% to $50.3.

The dollar fallout more broadly is harder to figure - not

least with Japanese markets closed for a holiday on Monday and

following Thursday's latest round of yen-buying intervention by

the Bank of Japan.

On balance, the dollar index and dollar/yen

were stuck fast - with early dollar gains against Mexico's peso

and China's yuan pared back a bit ahead of the

open as full-year Fed easing speculation rose as high as 63 bps.

The euro and sterling held last week's gains,

the latter at its best levels in a year against the dollar and

in two years against the euro. Currency market

volatility subsided, meantime, and three-month implied vol for

the pivotal euro/dollar exchange rate fell to its

lowest since late 2021.

China's markets had a mixed reaction to another surprisingly

poor set of economic readings there - second-quarter GDP growth

fell to as low as 4.7%, far below the 5% that was both forecast

by economists and also targeted by Beijing.

Although there was a slight beat in June industrial numbers,

retail sales also missed expectations for the month.

Perhaps most alarming of all is the ongoing house price

bust, with new home prices falling for the 11th straight month

in May and the 3.9% annual decline being the steepest in nine

years. Property investment fell 10.1% in the first half of 2024

from a year earlier, meantime, and home sales by floor area

declined 19%.

Hong Kong stocks did lunge 1.5% lower and the yuan

weakened slightly on interest rate cut speculation, but mainland

China stocks eked out a small gain on hopes of more

substantial government support.

China's ruling Communist Party starts its 'third plenum'

this week. Reforms top the agenda and, amid a packed priority

list, may include the most significant overhaul of the fiscal

system in three decades to try to redirect income from Beijing

to cash-strapped regional governments.

Back on Wall Street, the earnings season unfolds with

Goldman Sachs ( GS ) and BlackRock ( BLK ) next up after an

underwhelming start from other big banks on Friday.

And Google parent Alphabet is in advanced talks to

acquire cybersecurity startup Wiz for roughly $23 billion, in a

deal that would represent the technology giant's biggest

acquisition ever.

Key developments that should provide more direction to U.S.

markets later on Monday:

* New York Fed's June manufacturing survey

* US corporate earnings: Goldman Sachs ( GS ), BlackRock ( BLK )

* Federal Reserve chair Jerome Powell speaks in Washington, San

Francisco Fed President Mary Daly speaks; European Central Bank

President Christine Lagarde speaks

* Euro group of euro zone finance ministers meet in Brussels

* U.S. Republican party convention starts

* US Treasury auctions 3-, 6-month bills

(By Mike Dolan, editing by Timothy Heritage

[email protected])