Aug 4 (Reuters) - A look at the day ahead in European

and global markets from Wayne Cole.

It's been a case of buy the dip so far on Monday as U.S. and

European stock futures edge up, along with the dollar. The

Nikkei suffered a delayed reaction to Friday's Wall Street rout

and a jump in the yen, but the rest of Asia fared better.

Early trade saw Fed fund futures price in 65 bps of interest

rate cuts by December, but that's back to 60 bps now. That's

still a world away from the 33 bps seen before Friday's weak

U.S. payrolls report, and September is still 83% for an easing.

In fact, the 25 bps drop in two-year yields on Friday was

essentially the market doing a Fed rate cut for them, given how

borrowing costs in the States are tied to yields not the funds

rate.

Ten-year yields also fell a steep 14 bps but met resistance

around 4.20%, a level they have repeatedly struggled to break

under since October last year.

Longer term, downward revisions to payrolls have seriously

challenged the U.S. claim to economic out-performance and the

dollar's crown of exceptionalism. The latter was also tarnished

by President Trump firing the head of the Bureau of Labor

Statistics, an institution with an invaluable reputation for

scrupulous honesty that won the trust of investors worldwide.

Or, at least, it used to be. Now, Trump says he will chose a

new head for the BLS in the next few days. Will it be an

independent-minded statistician dedicated to providing credible

data, or a Trump loyalist eager to please their master?

U.S. assets enjoy a trust premium that will be really hard

to maintain as Trump bends all levels of government to his will.

Trump also just floated the idea of using some of the

windfall from tariffs to pay "dividends" to a lucky group of

Americans chosen by him - no doubt with special cheques bearing

a "TRUMP" logo.

So you slap taxes on everyone that buys imports, whether

they have a choice or not, and then use part of the revenue to

pay money to those you favour, in your name rather than the

government that's actually doing the work.

Talking of tariffs, a U.S. appeals court late last week

heard arguments on the legality of Trump's "reciprocal" levies

and sounded inclined to support the original ruling that the

tariffs were illegal.

Such a ruling would likely still go to the Supreme Court,

which has tended to favour unbridled presidential power. Yet,

should the tariffs be found illegal, not only would all the

trade deals agreed or underway be null and void, but the

Treasury would have to refund all the money collected.

Wouldn't that be fun...

Key developments that could influence markets on Monday:

* Swiss CPI for July

Trying to keep up with the latest tariff news?

Our new daily news digest offers a rundown of the top

market-moving headlines impacting global trade. Sign up for

Tariff Watch here.