TRADING DAY-The oil, bonds tango

By Jamie McGeever

ORLANDO, Florida, May 4 (Reuters) - Oil prices jumped further above the $100-a-barrel mark on Monday as Iran controls the Strait of Hormuz, despite U.S. efforts to free up shipping, pushing U.S. Treasury yields higher and dragging stocks lower.

In my column today, I look at U.S. inflation and why consumers, businesses and investors should brace for 4%. Inflation has been above the Fed's 2% target for so long already, and the energy shock will only drive it higher in the months ahead.

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. Most Strait of Hormuz shipping at a standstill despite latest US pledge

2. Iran hits ships and UAE oil port in show of force after Trump orders Navy to open strait

3. ANALYSIS-Investors are running out of time to brace for true oil shock

4. Cerebras targets $26.6 billion valuation in US IPO as AI chip demand surges

5. PREVIEW-US Treasury seen holding coupon sizes steady, leaning on bills as tariff refunds loom

Today's Key Market Moves

* STOCKS: Asia ex-Japan +2.8%, best day in a month, led by KOSPI's 5% surge to new highs. Europe -1%, worst day in a month. Wall Street in the red, Dow -1%.

* SECTORS/SHARES: All 11 sectors in the S&P 500 fall except energy, +0.9%. Materials -1.6%, industrials -1.2%. GameStop -8.5% eBay +5%; UPS -10%, FedEx -9%. Micron Technology +6%, Oracle +5%.

* FX: Yen slips back to 157/$, US-Iran war underpins dollar. Indian rupee hits new low. Bitcoin briefly regains $80,000 for first time since late January.

* BONDS: U.S. yields spike ~6bps across the curve. 2y and 10y highest since late March; 30y above 5%, highest since July.

* COMMODITIES/METALS: Oil spikes - Brent +5%, WTI +3%. Gold -2%.

Today's Talking Points

* The only way is ... up?

If you thought AI capex forecasts couldn't go any higher, think again. Analysts at Morgan Stanley and Goldman Sachs have significantly revised up their outlooks, potentially raising the stakes even higher for stock markets, energy and commodity prices, inflation and interest rates.

Morgan Stanley's analysts now see the five major U.S. hyperscalers' AI capex topping $800 billion this year and $1.1 trillion next year, while Goldman's team expect cumulative AI infrastructure spend of $7.6 trillion by 2031. Eye-watering sums, which investors are betting the house on.

* Bumper earnings

Not unrelated to the above, U.S. earnings expectations are going through the roof. With the Q1 reporting season in full swing, earnings are on track to rise 27.8% from a year ago, according to Tajinder Dhillon at LSEG Data & Analytics. The full-year 2026 growth forecast is 22.6%.

These are extraordinary numbers - the Q1 growth estimate has virtually doubled in the space of a month, from 14.4% on April 1 - and would be the highest growth since late 2021. As ever the question comes back to sustainability and whether the AI spend will deliver the productivity gains and profits investors expect.

* Taking one for the meme

There's been a flurry of proposed and actual multi-billion dollar M&A activity in recent weeks, but nothing quite as eye-opening as GameStop's ambitious $56 billion cash and stock proposal for eBay.

The once stock market minnow that shot to fame during a meme-stock frenzy five years ago taking over the online retailer nearly four times its size has raised questions about GameStop's funding. And if this deal fails, could eBay be a target for someone else?

What could move markets tomorrow?

* Developments in the Middle East

* Energy market moves

* Australia interest rate decision

* Indonesia GDP (Q1)

* Hong Kong GDP (Q1, advance)

* Bank of England deputy governor Sam Woods speaks

* European Central Bank officials scheduled to speak include President Christine Lagarde and board member Philip Lane

* Canada trade (March)

* U.S. 'JOLTS' job openings (March)

* U.S. trade (March)

* U.S. PMI (April, final)

* U.S. services ISM (April)

* U.S. Federal Reserve officials scheduled to speak include Governor Michael Barr and Vice Chair for Supervision Michelle Bowman

* U.S. earnings include AMD, Arista Networks, Pfizer, KKR

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(Reporting by Jamie McGeever;)