Aug 10 (Reuters) -

What matters in U.S. and global markets today

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

Even though it allowed Wall Street stocks to clock another record high on Friday, the surprise drop in July U.S. payrolls didn't shift interest rate markets as much as the initial gasp might have suggested.

Markets are still pricing in a roughly 50-50 chance of a Federal Reserve rate rise next month, while Treasury yields ended only marginally lower on the day.

I'll get into that and more below.

But first, listen to the latest episode of the Morning Bid daily podcast, where we discuss the soft jobs print and President Trump's renewed effort to fire Fed Governor Lisa Cook.

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FED'S COOK GRILLED AGAIN

There were several reasons for the caution in rates markets after the soft jobs numbers, including an equally surprising drop in the unemployment rate, still-edgy oil prices, and fresh political pressure on the Fed. On top of that, $125 billion in new Treasury issuance is due this week.

Then there's the release on Wednesday of the arguably more critical consumer price inflation report for July. Annual headline and core rates are expected to tick lower for the month, but the former is expected to stay above 3%.

Oil isn't helping the mood, with Brent crude rising above $84 per barrel on Monday, as hopes of an Iran deal were tempered by Tehran's insistence on Washington making concessions before the Strait of Hormuz is reopened.

And concerns about Fed independence were rekindled on Friday as President Donald Trump demanded that Governor Lisa Cook answer mortgage allegations against her within three weeks - or face a dismissal that the Supreme Court has already ruled against.

Meantime, stock markets are still basking in the glow of a second-quarter earnings season that's registering an annual aggregate profit gain of 51% for S&P 500 companies, according to LSEG data.

Asia stock markets were generally higher on Monday, in the slipstream of Wall Street's gains on Friday, while U.S. equity futures were up slightly before the bell.

Elsewhere, China's July inflation numbers came in below forecast on Monday. The rest of the market calendar for the day is thin, with the earnings season petering out this week - even with eyes on updates from Applied Materials, Cisco and CoreWeave.

Chart of the day

Payrolls unexpectedly fell by 23,000 during July and the economy added 103,000 fewer jobs in May and June than previously estimated. Job growth averaged 20,000 per month over the past three months.

Last year, big downgrades to May and June led to President Donald Trump's firing of the BLS commissioner, Erika McEntarfer. Trump, without offering evidence, accused McEntarfer of manipulating the data.

On Friday, the Senate approved career economist Brett Matsumoto to take over as BLS commissioner.

Today's events to watch

-- U.S. Conference ⁠Board Employment Trends Index for July (10 a.m. EDT)

-- Cleveland Fed's Beth Hammack speaks (3 p.m. EDT)

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