Morning Bid: Inflation obscures all

By Mike Dolan

Aug 12 (Reuters) -

What matters in U.S. and ‌global markets today

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

It's inflation day stateside and an important moment for Federal Reserve thinking, not to mention for nervy bond markets.

To be fair, the consumer price report only makes for one of three big "inflation days" each month. Tomorrow will ‌bring the producer price update, while the Fed's favored PCE gauge will come later in the month. But ⁠CPI will start to form the picture.

I'll get into that and more below.

But first, check out my latest mid-week column, where I discuss Europe's unexpected performers, Japan's euro ‌debt purchases, and why inflation watchers should ‌care about rising populism.

And listen to the latest episode of the Morning Bid daily podcast, where we discuss CoreWeave's results and more. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.

INFLATION OBSCURES ALL

With annual headline ​and core inflation rates expected to tick slightly lower, today's report may chime with last week's softer July jobs numbers to douse speculation of a Fed rate hike next month. Right now, markets are priced 50-50 on that outcome.

Decent demand at Tuesday's 3-year Treasury ⁠auction helped calm the horses in the bond market, with 10-year notes coming under the hammer later today.

This week's rise in oil prices won't help, however, even though that obviously ​won't be captured in July consumer inflation. The impasse in Iran talks, as well as more attacks by the Iran-backed Houthis in the Red Sea on Tuesday, are keeping Brent crude close to $90 per barrel.

But ​there was better news back in the U.S. tech world as CoreWeave ‌surged 15% overnight after beating second-quarter revenue forecasts. The AI cloud company also upgraded its demand forecast, citing a backlog of more than $100 billion in orders in the second quarter.

Meantime, Super Micro Computer jumped 7% after ⁠its sales forecast also beat estimates.

And elsewhere, Taiwan's Foxconn, the world's largest contract electronics maker, reported a 35% rise in second-quarter profit, beating analyst forecasts.

Showing how the tech-led boom is flattering investment portfolios, Norway's $2.3 trillion sovereign wealth fund, the world's largest, posted a record profit of $184.3 billion for the first half of ⁠the year.

Broader equities were steady early on Wednesday, with Wall Street futures up before the bell. Elsewhere, a nearly 4% gain in South Korea's KOSPI lifted ​Asian shares.

Chart of the day

Near-record inventories, technological advances and the rise of key exporters such as Brazil and Russia have made the global food system more resilient to this year's "super" El Nino than similar past events.

World farm production has outpaced consumption and population growth since the 1980s, according to the U.N. Food ‌and Agriculture Organization (FAO). The changes have been driven by higher-yielding crop varieties, greater use of fertilizer and improved irrigation and crop protection, lifting yields of staples such as rice, wheat, corn and soybeans.

Today's events ‌to watch

• U.S. July CPI (8:30 a.m. EDT), 10-year note auction (1 p.m. EDT)

• U.S. corporate earnings: Cisco Systems

Want to receive the Morning Bid in your inbox every ⁠weekday morning? Sign up for the newsletter here. You ‌can find ROI on the Reuters website, ​and you can follow us on LinkedIn and X.

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)

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