MORNING BID AMERICAS-Fed alert

By Mike Dolan

May 13 (Reuters) -

What matters in U.S. and global markets today

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

Oil prices remain elevated, inflation is climbing and bond markets are feeling the heat as the Iran war stalemate continues. Higher-than-forecast U.S. consumer price inflation of 3.8% in April underlined the simmering problem on Tuesday, with headline inflation now expected to top 4% this month - double the Fed’s target.

Even the “trimmed mean” cut of inflation, favored by incoming Fed Chair Kevin Warsh, showed its biggest monthly rise in more than two years.

I’ll get into that and more below.

But first, check out my latest column on the many factors placing bellwether government borrowing markets under strain.

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.

FED ALERT

The hot inflation prints have pushed Fed futures markets to wipe away any chance of a rate cut this year, and there’s now an 80% chance that the next move will be a hike as soon as next April.

That catapulted 30-year U.S. Treasury yields back above 5% in what was another ugly day for long-dated government bonds - not least in Britain, where political uncertainty around Prime Minister Keir Starmer’s future continues.

Meantime, President Donald Trump arrives in Beijing today for a summit with his Chinese counterpart Xi Jinping. Trade, geopolitics and AI look set to dominate, with top U.S. tech bosses including Elon Musk and Nvidia’s Jensen Huang among the president's entourage.

Trump’s agenda is likely to be wide-ranging but a renewal of Chinese commitments to free up critical rare earth supplies will be one big issue. The Iran war is also likely to feature - though Trump said on Tuesday he does not think he will need China’s help to end the conflict.

Elsewhere, Asian shares rebounded on Wednesday after a weak start, with South Korea’s volatile, chipmaker-heavy KOSPI bouncing back from an early selloff to close up over 2%. European shares also rose in early trading, while Wall Street futures pointed higher before the bell.

Oil prices eased modestly on Wednesday, but both Brent and WTI crude remained above $100 per barrel and well above last week’s lows.

Earnings are back on the agenda stateside later today, with Cisco topping the bill. Additionally, April producer price data will provide another key read on inflation pressures. And a closely watched 30-year Treasury auction will test investor appetite after the latest bond market selloff.

Chart of the day

U.S. consumer inflation jumped again in April, with the annual rate posting its largest gain in three years. Incoming Fed Chair Kevin Warsh says he favors looking at "trimmed mean" inflation cuts that strip out the more extreme price moves each month. But the Cleveland Fed's "trimmed mean" CPI for April also showed its biggest monthly gain since January 2024, with the annual rate rising to 2.8%.

Today's events to watch

• U.S. April PPI (8:30 a.m. EDT)

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

• President Trump arrives in Beijing

• Boston Fed's Susan Collins and Minneapolis Fed's Neel Kashkari speak

• U.S. corporate earnings: Cisco

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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.