Morning Bid: Learning to love the inflation

By Mike Dolan

June 11 (Reuters) -

What matters in U.S. and global markets today

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

Markets are getting hit on several fronts: war, inflation, interest rate rises and tech jitters. And while Donald Trump may "love the inflation", the markets and wider public disagree.

True, Trump may have misspoken and was likely nodding not to elevated prices themselves, but to the fact that May's core CPI reading was slightly cooler than forecast. But with headline inflation back as high as 4.2%, investors trying to slice and dice the report for some optimism appear to be having a harder time than the president - and will have to digest today's May producer prices update, too.

I'll get into that and more below.

But first, check out my latest column on what low-hanging fruit the EU should pick to help bring about a "global euro".

And listen to the latest episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.

LEARNING TO LOVE THE INFLATION

Oil prices fell on Thursday, having pared earlier gains triggered by another round of military exchanges between the U.S. and Iran overnight, which took their tit-for-tat strikes into a second straight day.

Meanwhile, with the mega SpaceX IPO just about to hit the Street, the broader chip and tech sectors can't seem to find their feet. Major U.S. stock indexes closed lower on Wednesday as chipmakers extended recent declines, with the SOX chip index falling back over 3%. Wall Street futures were up before the bell on Thursday, however.

Oracle plunged 9% in overnight trading after its earnings on Wednesday, coming soon after Broadcom's own post-earnings swoon set nerves jangling last week. For Oracle, tensions centered on a growing debt pile as it borrows more to fund its AI infrastructure buildout.

Adding to the angst about borrowing costs, the European Central Bank is set to deliver its long-awaited rate rise on Thursday, with focus likely to be on how much more tightening it could signal down the line.

It's unlikely to suggest that today's hike is "one and done" as the Iran war is aggravating its own inflation forecasts. Markets are braced for as many as two further ECB moves later this year.

Next week, markets will turn their attention to an expected Bank of Japan rate rise and a likely hawkish Federal Reserve meeting.

Notably, Treasury yields rose shortly after tensions in the Gulf ratcheted higher, even though there appeared to be decent demand at Wednesday's 10-year Treasury debt auction. Kevin Warsh will not have an easy job at his debut meeting next week.

Chart of the day

This year's FIFA World Cup tournament - co-hosted by the United States, Canada and Mexico - kicks off on Thursday amid much excitement and considerable controversy over everything from U.S. visas to sky-high ticket prices. But some of the economic value of hosting the world's biggest sporting event can be seen in vacation rental bookings in the cities holding the games.

Today's events to watch

-- U.S. May PPI (8:30 a.m. EDT), weekly jobless claims (8:30 a.m. EDT)

-- U.S. 30-year bond auction (1 p.m. EDT)

-- ECB interest rate decision (8:15 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.

(By Mike Dolan)