A look at the day ahead in U.S. and global markets from Mike Dolan

Wall St looks set to return from the 'Juneteenth' holiday in a slightly more cautious mood as hawkish European policymakers contrast with another interest rate cut in China and as U.S. housing dominates the data slate.

Both the S&P500 and Nasdaq hit new 14-month highs on Friday before a late retreat and futures continued the consolidation on Tuesday, marginally in red along with overseas bourses.

The main macroeconomic news overnight was a rather underwhelming Chinese rate cut that seemed to disappoint the local stock and currency markets, both of which fell.

The People's Bank of China cut two benchmark lending rates - its one-year and five-year loan prime rates - by 10 basis points each. The prime rate cuts, the first in 10 months, followed similar easing in other money rates last week but were less aggressive than some had hoped - with 50% of respondents to a Reuters poll forecasting a 15-bps cut to the five-year rate.

With Goldman Sachs on Monday the latest to cut China growth forecasts for this year and next, nerves about the economy's trajectory are rising again.

While some now doubt whether China is prepared for another mega monetary or fiscal stimulus to support its spluttering post-COVID recovery, the rate moves do stand in contrast to ongoing Western credit tightening and come alongside some thaw in Beijing's relations with Washington.

On Monday, China's President Xi Jinping welcomed "progress" on easing bilateral tensions after shaking hands with U.S. Secretary of State Antony Blinken at the Great Hall of the People, with both sides agreeing to stabilize their intense rivalry so it does not veer into conflict.

The meeting likely tees up a summit between Xi and U.S. President Joe Biden later in the year.

Global bond market nerves were jarred again by what's set to be another hawkish week for central bank watchers in Europe - with further rate hikes in Britain, Switzerland, Norway and Turkey expected.

The UK gilt market was in the eye of the storm, with money markets - fearing Britain may now be an inflation outlier as prices subside elsewhere - pushed the likely peak in Bank of England interest rates closer to 6% by next March and two-year fixed mortgage rate deals hit 6% for the first time this year.

While most expect a quarter point BOE rate rise this week, as many as one in three see a half point move to 5% - above which two-year bond yields rose on Monday for the first time in almost 15 years. May UK inflation readings on Wednesday will now be critical to the picture.

All of which underlines the relative calm in U.S. Treasuries, where the MOVE index of U.S. government debt market volatility on Friday hit its lowest since early February.

While the Federal Reserve is expected to hike one last time next month after last week's 'skip', markets doubt Fed indications that two more may be in the pipeline. Fed chair Jerome Powell answers questions in Congress on Wednesday.

The big U.S. data input this week is from the housing sector, where signs of some recovery are reinforcing 'soft landing' hopes for the wider economy.

On Monday, the NAHB's house market sentiment index rose in June to its highest in almost a year and far above forecasts. U.S. May housing starts and permits are released later today.

On the corporate front, FedEx releases its latest earnings update in an important gauge of the health of both domestic and international logistics and supply chains.

Events to watch for later on Tuesday:

* U.S. May housing starts/permits, June Philadelphia Fed services index

* Federal Reserve Vice Chair for Supervision Michael Barr and New York Fed President John Williams speak, St Louis Fed chief James Bullard speaks

* U.S. corporate earnings: FedEx

* Indian Prime Minister Narendra Modi starts state visit to United States

(By Mike Dolan, editing by Susan Fenton mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)