ORLANDO, Florida, March 19 (Reuters) - Wall Street fell

on Thursday in highly volatile trading that saw huge swings in

world stocks, bonds and oil prices, as traders began to price in

global interest rate hikes to counter the inflationary pressures

of the Middle East energy crisis.

In my column today I look at the increasing likelihood that

incoming Fed Chair Kevin Warsh's first interest rate move will

be a hike, not the cut his boss is craving.

If you have more time to read, here are a few articles I

recommend to help you make sense of what happened in markets

today.

1. Trump tells Israel not to repeat strikes on Iranian

energy as crisis deepens

2. Iran attacks wipe out 17% of Qatar's LNG capacity for

up to five years, QatarEnergy CEO says

3. Iran war leaves deep, costly scar on Mideast energy:

Bousso

4. Central banks stand ready to tackle war-led inflation

5. Iran war escalation wakes markets up to risks of

deeper economic pain

Today's Key Market Moves

* STOCKS: A sea of red in Asia and Europe. Japan, India,

South Korea down 3% or more; Britain, Germany, pan-European

benchmarks down 2% or more. Wall Street's big three indices pare

losses but end down 0.3-0.4%.

* SECTORS/SHARES: Eight sectors on the S&P 500 fall,

materials -1.6%, consumer staples and discretionaries -0.8%.

Energy +1.5%. Baker Hughes +5.6%, Chevron +1.4%; Newmont -7%,

Micron Technology -4%.

* FX: Dollar slides 1%, biggest fall since April last

year, as non-Fed cenbanks turn hawkish. Euro, yen, sterling big

gainers after respective policy meetings.

* BONDS: U.S. yields rise as much as 12 bps, 2s/10s

curve flattens to 40 bps, flattest since August. 2y gilt yield

soars 30 bps

* COMMODITIES/METALS: Oil settles +1% but well off

earlier highs - Brent had nudged $120/bbl. Gold -4%.

Today's Talking Points

* The fog of war

The longer the war in the Middle East goes on, the more

questions it raises. Has the Trump administration met its goals

or not? Does it need help from its allies or not? Will the

Strait of Hormuz re-open soon or not? Are Israel and the U.S.

communicating closely or not?

In a sign that $100 oil and financial market pressures are

bearing down on Washington, U.S. Treasury Secretary Scott

Bessent on Thursday said sanctions on Iranian oil may be

removed. This follows a similar easing of curbs on Russian oil

last week.

* Short-term price pain, long-term macro pain

Pressure on the Fed and other central banks to raise rates

to counter energy-driven inflation is mounting rapidly. But the

long-term economic damage - consumer spending, wealth effects,

and energy supply disruptions or even shortages - could be

substantial.

These opposing forces are being highlighted in the dramatic

flattening of yield curves. The two-year U.S. yield is shooting

up to 3.90%, the highest since August, shrinking the gap between

the 10-year yield to just 40 bps. A policymaker's nightmare.

* Gold melts

This should be gold's moment - war, geopolitical crisis, a

global energy shock, $100-a-barrel oil, and inflation pressures

soaring - yet it is crumbling. It's down 8% this week, on track

for its worst week since March 2020. It's down 13% this month,

which would be its worst month since 2008 and second-worst in

more than 40 years.

What's going on? It's worth recalling the rally that

culminated in gold topping $5,500/oz in January, much of which

was speculative. Now that investors - retail, institutional,

official - are scrambling for cash and liquidity, assets that

went up most are vulnerable. None more so than gold.

What could move markets tomorrow?

* Developments in the Middle East

* Energy market moves

* New Zealand trade (February)

* Taiwan exports (February)

* China interest rate decision

* UK public finances (February)

* Germany producer price inflation (February)

* Euro zone trade, current account (January)

* Canada producer price inflation (February)

* Canada retail sales (February)

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