US equity futures remain extremely illiquid, jittery and volatile, and are down 10bps near the morning lows, erasing a 0.5% gain after earlier rebounding on hopes the upcoming SPR release will keep oil lower (it has so far failed to do that). Global equities saw a leg lower during APAC hours following an FT report that JPMorgan is marking down private credit portfolios. Mixed messaging from the Trump administration has helped fuel sharp swings in volatility gauges, with the VVIX jumping 10 points on Tuesday. As of 8:10am ET, S&P and Nasdaq futures are down 0.1%, as Oracle’s 10% climb in the pre-market offers support to the AI trade, while inflation is back in focus with today’s CPI print. The ORCL print supports optimism across the secular AI data center trade with focus on raised FY27 rev guidance on management's expectations for continued expansion in AI and advanced compute demand. Asia is leading overseas with TWSE up 410bps, NKY up 143bps, Europe flat to lower led on the downside by Germany down 67bps. In commodities, crude up 300bps feels like a non-event vs. intra day swings over the last seven trading days. Oil does, however, remain in focus as strikes continued across the Middle East overnight, with the UK Navy noting three vessels were hit in the Strait of Hormuz and the Persian Gulf. The IEA is proposing a record release of up to 400 million barrels of emergency oil reserves — more than double the amount deployed after Russia’s invasion of Ukraine. However, asexplained here, it is unlikely the release will do much for a sustained drop in prices. Moves elsewhere in commodities benign. Yields elevated ahead of CPI with 10-year at 4.17%, dollar bid back with DXY at $99 and Bitcoin lower down 1% just below $70k. German CPI in line at +1.9%. We’ll get US CPI at 8:30am ET this morning.

In premarket trading, Magnificent Seven stocks are mixed (Alphabet -0.1%, Amazon +0.1%, Meta -0.01%, Nvidia +0.2%, Apple +0.1%, Microsoft +0.1%). Tesla rises 0.2% after Business Insider reported that the company is ramping up an AI agent project

In other AI news, the Chinese government moved to curb the usage of OpenClaw for banks and state agencies amid a user rush to adopt the AI agent. Amazon is making its debut in the euro bond market with a record eight-part sale, with maturities ranging from two to 38 years, following the 11-part dollar sale on Tuesday to fund AI investments. Elsewhere, Nintendo surged due to the surprise success of its new Pokémon game.

US futures are struggling for direction and Brent climbed back above $90 a barrel as an expected record release of crude stockpiles failed to lift sentiment amid attacks on vessels in the Middle East, simply because it will do little to offset the daily supply taken out by the Strait blockade. Volatility continued to grip equities, with S&P 500 contracts erasing a 0.5% advance, and it's nowhere near over: equities are “set for days of upcoming volatility, as the conflict in the Middle East is far from being resolved,” according to Roland Kaloyan, head of European equity strategy at Societe Generale adding that “Moving forward, there are high chances of seeing alternating risk‑on and risk‑off days.” The“markets’ starting point from when the conflict began was quite high so it’s also some excess optimism being cut to risk premiums which appears closer to what we perceive as the fundamentals.”

Sentiment was also dented as JPMorgan restricted some lending to private credit funds after marking down the value of certain loans in their portfolios, the latest sign of stress in the $1.8 trillion industry.

As the Iranian conflict rages on with no sign of de-escalation, the UK Navy said three ships were attacked in the Strait of Hormuz and the Persian Gulf. Governments are seeking to contain the spike in energy prices, with the International Energy Agency proposing a release of emergency oil reserves of as much as 400 million barrels, according to a person familiar.

“It’s helpful, but it’s more a short-term fix,” said Richard Saldanha, global equity fund manager at Aviva Investors. “The reality is, the way we’re going to avoid any kind of long-term shock is the Strait of Hormuz re-opening again.”

In the latest oil news, the IEA will propose the biggest-ever release of oil reserves. The potential 400 million barrels would cover days of global demand. OPEC’s monthly deep-dive analysis on the global crude market will likely draw more attention than usual.

The US CPI print will be closely watched as stagflation concerns resurface. Bloomberg Chief US Economist Anna Wong expects the reading to be “unseasonally tame,” citing disinflationary effects from several heavily weighted components, while two new supply shocks - in metals and memory chips - were building pre-Iran. Derivatives strategists at Barclays say the S&P 500’s implied move for Wednesday is materially higher than recent history with the forward volatility term structure having shifted higher amid market stress.

The consumer price index report is projected to show a core inflation measure, which strips out volatile food and energy costs, rising 0.2% last month. That would suggest some easing in price pressures before the outbreak of the war. Money markets are leaning toward a Federal Reserve rate cut in July and the possibility of a second move in December.

Source: ZeroHedge News