October CPI Exceeds Expectations, Annual Rate Absent
The U.S. Bureau of Labor Statistics reported the October Consumer Price Index on the 10th. Overall CPI rose 0.4% MoM, above the market expectation of 0.3%, while core CPI excluding food and energy rose 0.3% MoM, also above the expected 0.2%, indicating hotter-than-expected inflation. Due to the interruption of data collection caused by the U.S. federal government shutdown last October and the lack of a complete comparison base, the overall and core CPI annual rates were not released this time. Bank of America estimated via imputation that October overall CPI annual rate was about 3.8% and the core annual rate was about 2.7%. After the data release, the U.S. 10-year Treasury yield rose by as much as 16 basis points to 5.023%, while the 2-year yield jumped 21.6 basis points to 4.763%.
Officials Turn Hawkish, December Hike Calls Rise
Federal Reserve Governor Waller delivered a strongly hawkish signal in a speech on the 10th, explicitly supporting a rate hike at the December meeting. He said that with October core CPI at 0.3% MoM or higher, a hike of only 1码 was insufficient to suppress inflation, and a 2码 hike at once should be considered to defend policy credibility. Dallas Federal Reserve Bank President Logan also expressed support for rate hikes, arguing that at least two more hikes of 1码 each were still needed, and the pace of hikes may need to accelerate to prevent price pressures from spreading. She noted that inflation pressures stem not only from wartime energy disruptions or tariff shocks, but also from broad and persistent structural trends, with current policy leaning accommodative and needing to be restrictive. Vice Chair Bowman warned of risks from tightening financial conditions, saying that if returns on artificial intelligence investment fall short of expectations, stock prices could plunge sharply, while AI-related debt is rising rapidly, including corporate bonds, private credit and project financing, expected to exceed $800 billion this year.
US-Iran Standoff, Strait of Hormuz Remains Closed
U.S. Secretary of State Rubio said on the 10th in Paris after attending the G7 foreign ministers' meeting that U.S. economic sanctions and the maritime blockade against Iran have proven highly effective, imposing Giant economic pain on its regime and depleting its oil supply, so President Trump sees no need to launch large-scale military action. But regarding Iran's seven demands for ending the conflict, including lifting the maritime blockade, unfreezing assets and providing compensation, Rubio criticized them as absurd, insincere and completely unrealistic. Iran said on the same day that the U.S. and Iran are not currently engaged in any negotiations. Foreign Minister Araghchi dismissed reports of a meeting arranged between Vice President Vance and Iran's Supreme National Security Council Secretary Rezaei, and reiterated that the Strait of Hormuz will not reopen until the seven conditions are met.
Nvidia Plunges, TSMC ADR Rises Against Trend
Wall Street stocks retreated on the 10th. The Dow Jones Industrial Average opened 226 points lower, with losses widening to as much as 412 points at one stage, closing down 157.86 points or 0.3% at 52231.89; the S&P 500 fell 29.01 points or 0.38% to close at 7520.93; the Nasdaq fell as much as 1.73% intraday, closing down 187.26 points or 0.74% at 25065.88; the Philadelphia Semiconductor Index fell 35.6 points or 0.35% to close at 9998.33, with all four major indexes falling together. Among individual stocks, Nvidia fell as much as 7.2% intraday to a low of $165.89, with its market value briefly falling below $4 trillion, closing down 5.47% at $168.89. Anthropic launched enterprise office and collaboration AI tools, challenging Microsoft and Google. Microsoft closed down 2.2% at $533.16, while Alphabet edged down 0.38% to $284.92. Amazon rose 1.48% to $270.87, Tesla rose 0.46% to $379.78, Meta closed flat at $641.39, and Apple fell 0.62% to $348.51. Taiwan-related ADRs moved higher against the trend, with TSMC ADR up 2.02% to $396.48, ASE ADR up 3.26% to $35.48, and UMC ADR up 1.01% to $15.04.