ORLANDO, Florida, Aug 10 (Reuters) - Wall Street wobbled and

oil prices leaped 5% on Monday, as hopes of a U.S.-Iran peace

deal and reopening of the Strait of Hormuz faded, while

investors looked ahead to U.S. inflation data later in the week

and remained on alert for more intervention in the yen.

In my column today, I explain why the shock decline in U.S. jobs

last month is unlikely to deter the Federal Reserve from raising

interest rates. That's because policymakers' favored labor

market gauge, the unemployment rate, continues to point them in

that direction.

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. FOMO fuels Wall Street's breakout rally as traders pile

in

2. Nvidia, Wall Street firms partner on $500 billion AI

financing venture, source says

3. Intel plans $15 billion share sale as turnaround rally

lifts stock

4. BOJ's rate-hike path runs into Takaichi's bond market

problems

5. China July factory-gate inflation eases to 3-month low,

CPI slows

Today's Key Market Moves

* STOCKS: Nikkei +2% to 2-week high, UK -0.4%, Europe ekes

out new record high close. Wall Street in the red: Nasdaq -0.3%,

Russell 2000 -0.6%.

* SECTORS/SHARES: Six sectors on the S&P 500 rise, five

fall. Tech -1%, energy +4.6%. Intel -4%, Nvidia -3%; Marathon

Petroleum +7.5%, Chevron +4.5%.

* FX: Yen biggest decliner in G10 FX, -1% through 159.00/$.

Dollar index +0.3%. Indonesian rupiah +0.8%

* BONDS: 10-year JGB yield +3 bps, U.S. yields up 4-5 bps

across the curve.

* COMMODITIES/METALS: Oil +5%. Gold +1% to 9-week high

$4,395/oz.

Today's Talking Points:

Shaken, rattled and... ready to roll?

Hedge funds had a turbulent July, epitomized by the saga

surrounding Situational Awareness, the AI-focused fund whose

portfolio value plunged nearly 70% in the month and that was

forced to sell most of its assets to Citadel.

Hedge fund industry research firm HFR says technology funds

had their worst month since 2008, with the HFR tech index

falling 7%. Analysts at JPMorgan, citing preliminary figures

from research firm Pivotal Path, note that TMT Equity Sector

hedge funds lost an "unprecedented" 10%, excluding the

Situational Awareness loss.

Has the selloff sufficiently cleared the decks? By some

estimates, there has been a deep deleveraging, and long AI

trades appear to be recovering - the Philadelphia "SOX"

semiconductor index is up 10% so far this month. But July was

bruising, and funds and prime brokers may want to rethink risks

around concentration, volatility, margin levels and liquidity.

If funds do rebuild exposure, it may not be as frenzied or as

levered as before.

Speculation liquidation

On the subject of clearing the decks, the historic U.S-Japan

FX market intervention in late July sparked speculators'

biggest-ever liquidation of net short yen positions in CFTC

futures contracts. Funds' net short position collapsed by a

record 118,000 contracts - a result of gross shorts plunging

72,000 contracts (the second most on record) and gross longs

rising a record 46,000 contracts.

The dollar quickly sank around eight "big figures" to 155

yen from 164, but has already retraced half of that move,

crossing back above 159 yen on Monday. The worry for Tokyo and

Washington is this shows the market has little to no faith in

their strategy, which would be costly in terms of hard dollars

but, more importantly, longer-term credibility. As ever, FX

traders are testing policymakers' resolve - will the Bank of

Japan raise rates next month and outline a more hawkish

tightening path? Can it?

Deflating expectations

Inflation figures from Beijing over the weekend will have

disappointed those hoping to see China move out of its

multi-year deflationary funk. Prices pressures were expected to

cool thanks to lower oil, but not this much - both factory gate

and consumer price inflation slowed more than expected.

Among the more discomfiting numbers was annual core CPI,

which softened to 0.9%, falling below 1% for the first time

since January and an indication that domestic demand remains

weak. FX market developments are also worth bearing in mind -

although the yuan is significantly undervalued, judging by the

huge trade surplus, it continues to strengthen very gradually

and is strongest against the dollar since early 2023. On the

margins, that could also put further downward pressure on core

goods inflation.

What could move markets tomorrow?

* Developments in Middle East

* Australia interest rate decision

* Brazil inflation (July)

* U.S. Treasury sells $58 billion of 3-year notes at auction

* U.S. earnings including CoreWeave, Super Micro Computer

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