Morning Bidding: Bauer, Data, Taiwan Earthquake Keep Markets Nervous

(Reuters) - Samuel Indyk's outlook for the day ahead in U.S. and global markets

The market's rocky start to the second quarter could worsen on Wednesday. Fed chief Jerome Powell is scheduled to speak, and markets are skeptical that the central bank will begin easing as soon as June.

Money market traders in this year's first interest rate cut timing and easing slowly mode with the Fed and most analysts have different views.

As much as the market sees the likelihood of a rate cut in June as about 65%, it is still not entirely certain that rates will be cut before July. At the same time, they also downgraded the expected three rate cuts in 2024, but with the continuation of inflation and strong economic data, the Fed itself may also slowly accept this view.

I think the greater risk is to start cutting the funds rate too soon," resilient Loretta Mester, president of the Federal Reserve Bank of Cleveland, said on Tuesday, although she did not rule out a June rate cut if upcoming inflation data matched her forecast of a further decline.

Speaking about Friday's personal consumer spending data, Powell said the inflation reading was "at the level we'd like to see".

Powell's comments on Wednesday will be scrutinized for more clues about whether the June meeting is the right time to start easing policy.

The debate over the timing of the first rate cut has kept Treasury yields higher, threatening a stock market rebound that has made the U.S. stock market increasingly expensive as it reaches new highs.

On Tuesday, the benchmark 10-year Treasury yield hit its highest level in four months, while the S&P 500 slipped nearly 1% at the start of the quarter.

Investors will also be concerned about the impact on the supply chain following Taiwan's strongest earthquake in 25 years, particularly the disruption to the semiconductor industry.

"We believe this could lead to supply disruptions in the tech supply chain," analysts at Barclays said in a report.

Taiwan Semiconductor, a major supplier to Apple and Nvidia, initially pulled out of some of its manufacturing plants, but later said employees were returning to their jobs. The company's shares in Taipei slid 1.3%.

Elsewhere, Wednesday's data releases include the ADP Private Sector Payrolls report (a precursor to Friday's official non-employment data) and the March ISM Services Index.

Back on Wall Street, stock index futures are signaling another cautious start, with the S&P and Nasdaq resonance index futures falling slightly.

The dollar continued to strengthen and the yen was near 152, its weakest level in decades, making traders wary of interventions by Japanese officials.

Major developments later on Wednesday will provide more曏 for the U.S. market:

* :: Fed's Powell, Bowman, Goolsbee, Barr and Kugler to Speak

* ADP Non-Private Employment Data, ISM Non-Manufacturing Data

* :: U.S. Treasury to auction four-month notes

(Reporting by Samuel Indyk; Editing by Bernadette Baum)