TRADING DAY-Oil back above $100... and so?

By Jamie McGeever

ORLANDO, Florida, March 17 (Reuters) - Stocks rose, and bond yields and the dollar slipped on Tuesday, as investors shrugged off a rebound in oil prices that lifted Brent crude back above $100 a barrel, and turned their attention to the Federal Reserve's interest rate decision on Wednesday.

In my column today I look at why Chinese President Xi Jinping goes into his summit with U.S. President Donald Trump with a stronger hand than he would have thought possible a few months ago. With Trump's foreign policy agenda hogging the spotlight, China's economic recovery has gone under the radar.

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. U.S. 'transitory' inflation turns five and is still a big brat

2. How the Fed and other central banks can bark without biting: Mike Dolan

3. Iran's $200 oil threat isn't that far-fetched: Bousso

4. Trump's summit delay casts pall over U.S.-China trade truce

5. Debt investors offloading exposure to software companies is latest sign of pain

Today's Key Market Moves

• STOCKS: S&P 500 +0.25%, Nasdaq +0.5%. Europe +0.6%, UK +0.8%, Asia mixed.

• SECTORS/SHARES: Eight S&P 500 sectors rise, consumer discretionary and energy +1%. Healthcare is biggest decliner, -1%. Airline stocks rise, Delta +6%; private credit rebounds, Apollo and Blackstone +5%. Eli Lilly -6%.

• FX: Dollar drifts lower. Nokkie best G10 performer +0.9%, Aussie +0.5% after RBA hike.

• BONDS: U.S. yields down 2 bps at long end, 2s/10s curve down to 52 bps, near flattest levels of the year. 20-year auction draws solid demand.

• COMMODITIES/METALS: Oil +3%, Brent back above $100/bbl. Crude now up ~40% y/y. Gold steady around $5,000/oz.

Today's Talking Points

* Wall Street's "exceptionalism"?

U.S. stocks' outperformance since war in the Middle East broke out has been impressive. Compare and contrast: euro zone stocks are down 3%, UK stocks are down 4%, the Nikkei and Asia ex-Japan are down around 7%; the S&P 500 has lost less than 2% and the Nasdaq is almost flat.

Yet zoom out to January 1, and the picture flips on its head. So far this year: euro zone stocks are up 1%, UK stocks and the Nikkei are up 4%, and Asia ex-Japan is up around 7%; the S&P 500 has lost 2.5% and the Nasdaq is down 4.5%.

* U.S. fuel shock

Average U.S. gas prices at the pump are up 25% to just under or just over $4/gallon, depending on the survey, and diesel is now over $5/gallon. Jet fuel has jumped more than 50%, a rise that is sure to push the cost of air travel quite substantially.

So far, U.S. consumers have remained extremely resilient to the war-driven surge in fuel costs. But assuming they stay elevated for a while yet, they will bite. Perhaps this helps explain why the bond yield curve is flattening - once the initial inflation shock has passed, growth could slow sharply.

* Curves flatten everywhere

It's not just the U.S. yield curve flattening. If you believe what yield curves signal about the future growth outlook, bond markets are warning that a slowdown is coming in many industrialized economies.

The German 2s/10s yield curve has been flattening since early February when it was around 80 bps. It recently compressed to 45 bps, the flattest in a year. Similarly, the UK yield curve was above 90 bps, the steepest since 2018, but is flattening now. And the Aussie curve, facing rising policy rates, is the flattest since December 2024.

What could move markets tomorrow?

• Developments in the Middle East

• Energy market moves

• New Zealand current account (Q4)

• Japan tankan survey (March)

• Japan trade (February)

• European Central Bank begins two-day policy meeting

• Brazil interest rate decision

• Canada interest rate decision

• U.S. durable goods, factory orders (January)

• U.S. producer price inflation (February)

• U.S. Federal Reserve interest rate decision, revised economic projections and "dot plot", Chair Jerome Powell press conference

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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.

(Reporting by Jamie McGeever; Editing by Nia Williams)

((jamie.mcgeever@thomsonreuters.com; Reuters Messaging: jamie.mcgeever.reuters.com@reuters.net/))