A look at the day ahead in European and global markets from

Kevin Buckland

Rising equities and falling bond prices portray the market's

sanguine view on monetary policy, with a rate cut at next week's

Fed meeting not only seen as a sure thing but also having decent

odds for being a super-sized one.

Wall Street closed at fresh record highs overnight, Taiwan's

benchmark is vaulting to a new all-time peak, and

Japan's Nikkei is ticking back towards Tuesday's

unprecedented levels.

Although it looks like Donald Trump won't have his economic

adviser Stephen Miran on the Fed's board of governors for the

September 16-17 meeting - after a judge temporarily blocked the

U.S. President from removing Governor Lisa Cook - the undeniable

weakness of the labour market means that policy easing is

imminent.

What is in question, though, is how much still-sticky

inflation complicates the Fed's rate-cut trajectory, with

markets getting two days of crucial data in the form of PPI

today and CPI tomorrow.

Heated inflation readings would surely restart murmurs about

dreaded stagflation, making the Fed's next steps precarious.

Currently the market has 66 basis points of easing priced by

year-end, and 7% odds for a 50 basis point cut next Wednesday.

The Fed remains the dominant story across markets globally,

although European investors need to keep one eye on geopolitical

developments after NATO-member Poland for the first time shot

down apparent Russian drones that it said encroached on its

airspace during an attack on western Ukraine.

French politics, of course, is another focus, with deeply

unpopular President Emmanuel Macron's naming of 39-year-old

loyalist Sebastien Lecornu as his fifth prime minister in less

than two years begging the question of how long either man can

cling to power.

The outcome of the ECB's two-day meeting that starts today

is more certain, with economists all but united in expecting

rates to stay steady. A month ago, economists were split on the

chances of another cut, but unemployment at a record low while

inflation hovers close to target has changed those dovish minds.

Key developments that could influence markets on Wednesday:

-US PPI (August)

-Sweden monthly GDP (July)

-Norway, Denmark CPI (both August)

-Italy, Spain, Greece industrial output (all July)