June 18 (Reuters) -

What matters in U.S. and global markets today

By Anna Szymanski, Editor-in-Charge, Reuters Open Interest

Markets bristled at the Federal Reserve's hawkish tilt - but only briefly.

The U.S. central bank began the Kevin Warsh era by keeping interest rates steady at 3.50%-3.75%, as expected, though messaging signalled a tightening bias, which initially pushed up bond yields, spurring a selloff on Wall Street that even Elon Musk's SpaceX couldn't escape.

But global equities shrugged off that news on Thursday morning, as the signing of the memorandum of understanding between the U.S. and Iran sent oil prices tumbling to a three-and-a-half-month low.

I'll get into that and more below.

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KEVIN WHO? MOU TRUMPS FED

The S&P 500 and Nasdaq closed down more than 1% on Wednesday, and short-term Treasury yields rose to a 16-month high.

The Fed policy statement and press conference both appeared to signal a hawkish tilt, prompting futures markets to price in a bigger chance of a rate hike as soon as September.

Warsh told reporters that the central bank would "deliver on price stability", while new quarterly projections - which he did not participate in - showed nine of 19 policymakers expected a rate hike by the end of 2026.

President Donald Trump - who sharply criticized former Fed Chair Jerome Powell for not lowering rates - appeared to take this in his stride, saying on Wednesday that he would be guided by what Warsh wants.

As a reminder, Trump did signal in recent weeks that he would provide Warsh with some breathing room.

Meanwhile, markets got a preview of the quieter Fed we're likely to get under Warsh, with a stripped-down Fed statement that dispensed with forward guidance.

Ultimately, the bigger force moving markets today was not what happened in Washington yesterday but what investors expect to happen moving forward in the Middle East.

On Wednesday, the U.S. and Iran released their 14-point memorandum of understanding, which has been signed by President Trump and Iranian President Masoud Pezeshkian.

The MoU includes an immediate end to the war on all fronts, including Lebanon, the full resumption of maritime traffic "with no charge" in the Strait of Hormuz, the lifting of a U.S. blockade of Iranian ports, the waiving of U.S. sanctions on Iran, the unfreezing of its assets and a $300 billion investment fund for the Islamic Republic's post-war reconstruction.

While it's unclear whether the Strait will remain toll-free after the 60-day period ends, energy markets certainly appear to believe that energy shipments will soon be flowing at high levels through the narrow waterway, as Brent crude fell early on Thursday to around $78 per barrel.

This, in turn, appeared to lift investor sentiment on Thursday, with major Asian stock indexes hitting record highs. Wall Street futures are also in the green before the bell.

Finally, turning back to monetary policymakers, the Bank of England is expected to hold rates steady at 3.75% on Thursday as it assesses what the U.S.-Iran agreement could mean for inflation there. UK May CPI surprised to the downside yesterday.

Chart of the day

UK CPI held at a 13-month low of 2.8% in May as lower food prices helped offset rising airfares. The print came ahead of the BoE's policy decision due on Thursday, with rates expected to be held at 3.75%.

Today's events to watch

-- U.S. weekly jobless claims (8:30 a.m. EDT), Philadelphia Fed Business Index (8:30 a.m. EDT), 5-year TIPS auction (1 p.m. EDT)

-- Bank of England interest rate decision (7 a.m. EDT)

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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.