ORLANDO, Florida, May 26 (Reuters) - World stocks, the

S&P 500 and Nasdaq rose to new highs on Tuesday, driven again by

an unyielding optimism around artificial intelligence that

lifted U.S. chipmaker Micron Technology into the $1 trillion

club and offset uncertainty around a U.S.-Iran peace deal.

In my column today, I look at how the steep selloff in U.S.

Treasuries has made some corporate bonds more appealing than

sovereign debt. If the balance sheets of some mega companies are

strengthening and Uncle Sam's fiscal situation is deteriorating,

investors may decide to buy corporate over sovereign bonds.

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. ECB should raise rates in June, even if Iran peace

deal is struck, Schnabel says

2. US consumer confidence ebbs in May as inflation

worries mount

3. OpenAI's Altman says AI unlikely to lead to 'jobs

apocalypse'

4. SpaceX debut draws a crowd, but few recent hot IPOs

outpace the market

5. Sri Lanka stuns with 100-bp rate hike as Iran war

rattles currency, fuels inflation

Today's Key Market Moves

* STOCKS: South Korea +2.5% to new high. MSCI Asia

ex-Japan, MSCI All Country, S&P 500, Nasdaq, small cap Russell

2000 all hit record peaks too. Europe -0.6%, UK +0.2%.

* SECTORS/SHARES: U.S. tech +1.7%, energy -2.8%. BP -4%,

Micron Technology +19%, AMD +8%, Qualcomm +4.5%; Intuit -5%,

Chevron -3.5%.

* FX: Dollar flat. Kiwi among biggest G10 decliners

ahead of RBNZ, Israeli shekel biggest gainer, +1%.

* BONDS: U.S. yields fall broadly, as much as 8 bps at

short end to bull flatten the curve. 2-year auction goes ok.

* COMMODITIES/METALS: Oil mixed: Brent +4%, WTI -3%.

Gold -1.5%.

Today's Talking Points

* The trillion-dollar club

Micron Technology on Tuesday joined the $1 trillion market

cap club. Briefly. But shareholders of America's largest

chipmaker won't care about that - the stock has exploded over

180% in less than two months, a scarcely believable run,

catapulting the company into an exclusive club.

Investors are also awaiting the anticipated IPO of SpaceX,

which could value Elon Musk's company at $1.75 trillion or more.

A note of caution though: big IPOs usually disappoint - a

Reuters analysis of the biggest 50 IPOs in the past five years

shows that investors would have been better off buying an S&P

500 index fund about three-quarters of the time.

* Appetite for protection

The U.S. Treasury auctions $183 billion of coupon-bearing

notes at the short end and belly of the curve this week, on top

of $28 billion of 2-year floating rate notes and hundreds of

billions of dollars of bills. That's a lot of supply to absorb.

The auctions will be a good gauge of investor appetite for

U.S. debt. Last week's sales of 20-year bonds and 10-year TIPS

weren't great, marked by weak demand and big tails. This week's

sales of shorter-term paper should go more smoothly, given how

lofty yields are. Right?

* ECB paves the way

The European Central Bank is very likely to raise interest

rates next month. That's the clear signal being sent out by two

of the central bank's most influential policymakers, chief

economist Philip Lane, and especially board member Isabel

Schnabel.

In an interview with Reuters, Schnabel said rates should

rise, even if a U.S.-Iran peace deal is reached. How much is

already priced into the euro's exchange rate? The 2-year

U.S.-German yield spread has widened in the dollar's favor

recently as Fed rate hike expectations have strengthened,

pushing the euro back towards $1.16. Room for a bounce?

What could move markets tomorrow?

* Developments in the Middle East

* New Zealand interest rate decision

* Australia inflation (April)

* Reserve Bank of Australia's Carolyn Hewson speaks

* Bank of Japan Governor Kazuo Ueda speaks

* U.S. Treasury sells $70 billion of 5-year notes and $28

billion of 2-year floating rate notes at auction

* U.S. Federal Reserve officials scheduled to speak include

Vice Chair Philip Jefferson, Governor Lisa Cook, and Dallas Fed

President Lorie Logan

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