A Reuters Open Interest newsletter

Making sense of the forces driving global markets

By Jamie McGeever, Markets Columnist 

Oil prices surged, Treasury yields spiked, and stocks fell on Monday after President Donald Trump said the US was reinstating its blockade of Iranian shipping in the Gulf, while the slide in tech shares continued as investors awaited U.S. bank earnings on Tuesday.

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* Buy - or sell - the chip

The AI bull/bear debate is intensifying, and positions are becoming more entrenched. Daily price swings and single stock volatility are increasing, especially in Asia - South Korea's SK Hynix fell a record 15% on Monday, realized volatility in the benchmark KOSPI remains extremely elevated. Meanwhile, Taiwan's TSMC on Monday announced record revenue in Q2. 

The U.S. turbulence is less severe, for now, but Wall Street is wobbling.            

* Off the Waller

Fed Governor Christopher Waller struck a hawkish tone on Monday, saying interest rates may need to be raised. Soon. His comments come a day before June CPI inflation data are released, and Chair Kevin Warsh is grilled by U.S. lawmakers. 

Waller is one of the most influential voices on the Fed's 19-strong rate-setting committee - an upside surprise in core CPI on Tuesday will surely strengthen markets' already firming rate hike expectations for later this year.

*  Banking on it

Wall Street financial giants JPMorgan, Goldman Sachs, BofA and Citi report on Tuesday, setting the tone for what analysts expect will be a bumper Q2 earnings season, even by the exceptionally high bar set by recent quarters. 

S&P 500 earnings are expected to jump nearly 24% year on year, according to LSEG IBES, with tech still expected to do the heavy lifting. Banks' conference calls will be closely monitored for commentary on AI and wider macro outlook.