ORLANDO, Florida, March 25 (Reuters) - Stocks rose and

oil prices and bond yields dropped on Wednesday, on hopes that

the U.S. and Iran are progressing toward a peace deal.

Investors' optimism was reflected in the MSCI All Country equity

index clocking its biggest rise in six weeks.

In my column today I look at the recent surge in bets on

higher interest rates in light of the Middle East energy shock.

Essentially, markets have overshot - the move may be logical,

but its magnitude is questionable.

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. Iran still reviewing U.S. proposal despite negative

initial response, senior Iranian official says

2. Western powers were unable to secure shipping in the

Red Sea. Hormuz will be harder

3. U.S. import prices post largest gain in nearly four

years in February

4. Iran war rattles Gulf petrodollar foundations: Mike

Dolan

5. How private credit can survive its stress test

Today's Key Market Moves

* STOCKS: A sea of green. Asia, Europe, Americas all

higher - standouts being Japan +3%, Euro Stoxx and FTSE 100

+1.4%, Mexico +3.6%. Wall Street's big three indices up

0.5-0.8%. MSCI World up ~1%, best day since February 9.

* SECTORS/SHARES: Nine of the 11 sectors in the S&P 500

rise; materials +2%, consumer discretionaries and healthcare

+1%. Energy -0.5%. Amazon and Nvidia +2%, tech firms Intel, AMD,

Super Micro Computers and Hewlett Packard all up 7-8%.

* FX: Dollar up broadly. USD/JPY back up near 160.00,

AUD is biggest G10 decliner.

* BONDS: U.S. bonds rally, curve bull flattens. 2s/10s

curve below 44 bps, lowest close since August. Like yesterday's

2-year sale, today's 5-year auction is very weak.

* COMMODITIES/METALS: Oil -2%, gold +2%. Comex copper

+1.5%.

Today's Talking Points

* News of great import

Figures on Wednesday showed that U.S. import prices in

February rose at their fastest rate in four years, up 1.3% after

an upwardly revised 0.6% gain in January. The price of imported

capital goods rose the most since 1988.

Rising energy costs in anticipation of conflict in the

Middle East were blamed. But remember, oil rose around 15% in

January and February - it is up 35% so far this month. Consumers

and businesses should brace for even stronger price rises in the

coming months.

* Premium service

The valuation premium that U.S. tech has long enjoyed over

the broader stock market has almost evaporated. Measured by

comparable forward 12-month price/earnings ratios, it is now the

smallest in seven years.

The Roundhill "Mag 7" ETF is down 10% this year, three times

as much as the S&P 500. Has the correction run its course?

JPMorgan reckons the AI story is still losing some momentum,

Barclays says the tech growth engine shows few signs of

stopping. You pays your money, you takes your choice.

* RoW finally selling Treasuries?

Foreign central banks' holdings of U.S. Treasuries held in

custody at the New York Fed are the lowest since 2012, and

poised to fall below $3 trillion for the first time since 2010.

The value of these holdings has tumbled $75 billion in the last

four weeks.

According to Deutsche Bank, that includes outright selling

worth around $60 billion, the most since 2020. Foreign central

banks were modest sellers of Treasuries last year, but that was

offset by $440 billion of private sector purchases. If official

selling is accelerating, will the private sector fill the gap?

What could move markets tomorrow?

* Developments in the Middle East

* Energy market moves

* Japan services PPI inflation (February)

* Germany GfK consumer sentiment (April)

* European Central Bank policymakers Luis de Guindos, Pedro

Machado and Patrick Montagner speak

* Bank of England policymakers Alan Taylor and Megan Greene

speak

* Norway interest rate decision

* South Africa interest rate decision

* Mexico interest rate decision

* Bank of Canada Senior Deputy Governor Carolyn Rogers

speaks

* U.S. weekly jobless claims

* U.S. Treasury sells $44 billion of 7-year notes at auction

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

Governors Lisa Cook, Stephen Miran, Philip Jefferson and Michael

Barr, and Dallas Fed President Lorie Logan

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