ORLANDO, Florida, Aug 3 (Reuters) - World stocks leaped to

record highs on Tuesday, boosted by a relentless stream of

strong U.S. and global earnings, with another slump in oil

prices on Middle East peace hopes pushing down on bond yields

and boosting investor sentiment also.

In my column today, I dig deeper into America's unprecedented

currency market intervention last week. Washington's commitment

to help Japan prop up the yen should not be doubted, but there

is a fair degree of self-interest at play too, especially

regarding the $29 trillion U.S. Treasury market.

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. Bessent's call to upsize Fed foreign lending facility may

not be risk-free

2. Japan may not have intervened in FX market on Monday

despite yen's surge, BOJ data suggests

3. US economy is overstimulated - and bond markets fear it:

Mike Dolan

4. EXCLUSIVE-Trump administration drafting ban on Chinese

data center devices, sources say

5. EXCLUSIVE-Shein targets $30 billion to $40 billion Hong

Kong IPO valuation this month, sources say

Today's Key Market Moves

* STOCKS: MSCI All Country, MSCI EM, and benchmark indices

in UK, Europe, and U.S. all hit record highs.

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

fall. Tech +4%, energy -0.5%. Palantir +30%. Sandisk, Intel,

Super Micro Computer +11%. SpaceX, AMD both -10% after the bell.

* FX: Dollar/yen rebounds, nudges 158. BRL -1%, CLP +1.5%

* BONDS: 10y Japan yield spikes to 2.87% after poor auction.

U.S. yields down 4-7 bps, curve bull flattens

* COMMODITIES/METALS: Oil -5.5%. Platinum, palladium +7%.

Today's Talking Points:

Dollar drift?

The U.S.'s historic intervention in the yen last week may mark

an inflection point for the dollar, not just against Japan's

flailing currency, but more broadly. If dollar/yen has topped

out, and the threat of more intervention forces traders to cover

their massive short yen position, the spillover to other

dollar/Asia crosses is not difficult to imagine.

Does this ease some of the 'beggar thy neighbor' approach to

FX policy across Asia? Again, it's a plausible scenario,

especially if peace breaks out in the Middle East and the slump

in oil prices continues to pull Treasury yields down from their

recent highs. A lot of "ifs and buts" in there, but there is a

case building that the dollar's 2026 race might be run.

Reaction (mall)function

A 20% slump in oil prices over the last 10 days has taken

the heat off the Treasury market, at least at the short end, and

by extension, the Fed. But debate continues to swirl around what

the Kevin Warsh Fed's reaction function will be. Warsh refuses

to tell us what his is, so investors are taking their cue from

others.

The three FOMC dissenters explained their decisions on

Friday, and New York and Philadelphia Fed Presidents John

Williams and Anna Paulson have outlined their thinking this

week. Is the center of gravity at the FOMC starting to shift?

The 9-3 vote to leave rates unchanged last week wasn't

necessarily a "dovish hold", and it is likely to be quite

different in September. Rate futures only pointing to one

fully-priced hike this year. Too timid?

Block rockin' BEATS

Investors by now know just how strong U.S. earnings growth

is, but some of the numbers bear repeating. According to SocGen

earlier on Tuesday, six out of 10 firms have reported, 70% of

market cap, and only 9% have missed estimates, the lowest

reading ever, while 86% of firms have beaten estimates. Both S&P

500 and ex-tech margins have hit record highs. Q2 y/y earnings

growth will be over 30%, according to UBS, and even approaching

50%, according to LSEG estimates.

Either way, it's a bullish backdrop. Is it all priced in

though? High market leverage and real yields are headwinds, but

a reversal would require aggressive Fed tightening and yield

curve inversion, says SocGen. So no reason why 8000 on the S&P

500 cannot be reached, right?

What could move markets tomorrow?

* India interest rate decision

* Brazil interest rate decision

* U.S. services ISM index (July)

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

Governor Lisa Cook, San Francisco Fed President Mary Daly

* U.S. earnings, including Eli Lilly, Sandisk, Western

Digital, Disney, Uber

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