GLOBAL MARKETS-Global equity index, bond yields edge up with focus on inflation and Middle East

‌MSCI's ​global equities gauge rose slightly after the latest U.S. inflation data while investors waited for results from AI heavyweight Nvidia, and oil prices gave up earlier gains as investors monitored the latest discussions about reopening the Strait of Hormuz.

A senior Iranian source said on Wednesday that Iran and Oman are ‌still working on the details of an agreement on the strait, which is a vital energy conduit. Earlier, Iran's Revolutionary Guards said the two countries had agreed on how to share the waterway and its revenues. However, the Guards' spokesperson said the strait would not open unless the U.S. met Tehran's conditions. Meanwhile, data showed annual U.S. inflation unexpectedly held steady in July, well above the Federal Reserve's 2% target for the ‌65th straight month.

"The market has been looking for a reason to pull back a little bit," said James Ragan, co-chief investment officer and director of investment management & research at D.A. Davidson. But ‌he noted the data would be unlikely to lead to a rate change at the Fed's September meeting. "The economy still looks pretty good. I wouldn't say there's anything in there that says the economy has accelerated so it's kind of more of the same," he said.

Besides the data, Ragan pointed to Nvidia's earnings report due out after U.S. markets close, as a major focus for investors on Wednesday. Along with the chip maker's second-quarter numbers and financial guidance, he said they will be ⁠keenly focused ​on the company's commentary on financing of the AI ⁠spending boom. At 11:51 a.m. ET (1551 GMT) the Dow Jones Industrial Average fell 96.83 points, or 0.18%, to 53,480.54, the S&P 500 rose 1.44 points, or 0.02%, to 7,678.98 and the Nasdaq Composite fell 40.12 points, or 0.15%, to 26,111.88.

MSCI's gauge ⁠of stocks across the globe rose 0.85 points, or 0.08%, to 1,150.50 while the pan-European STOXX 600 index rose 0.02%. While investors in energy markets focused on Strait of Hormuz talks between Iran and Oman, shipping disruption continued in the ​major oil-exporting region.

U.S. crude rose 0.02% to $82.38 a barrel and Brent fell to $88.44 per barrel, down 0.16% on the day. Oil's fluctuations also appeared to impact the bond market. U.S. Treasury ⁠yields edged higher after the inflation data while traders also monitored Middle East developments and weighed U.S. government plans to expand debt buybacks.

The yield on benchmark U.S. 10-year notes rose 1.74 basis points to 4.656%, from 4.639% late on Tuesday, while the 30-year ⁠bond ​yield rose 0.87 basis points to 5.1827%. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 1.36 basis points to 4.218%.

Odds that rates would stay steady edged up to roughly 62% from 60.4% on Tuesday, while bets for a 25-basis-point interest rate hike in September dropped to 38% from almost 40% the day before, according to CME Group's ⁠FedWatch Tool. However, rates are still expected to rise by year-end. In currencies, the dollar was higher after the inflation data that slightly increased expectations among some investors for a rate hike.

The dollar index, ⁠which measures the greenback against a basket of currencies ⁠including the yen and the euro, rose 0.24% to 99.15, with the euro down 0.19% at $1.1652. Against the Japanese yen, the dollar strengthened 0.09% to 159.31. In precious metals, gold prices were lower after hitting their highest levels since mid-May on Tuesday. Spot gold fell 1.06% to $4,607.16 an ounce, while U.S. gold ‌futures fell 0.65% to $4,607.80 an ounce.