This Week
Ten-year Treasury yields are up 30 basis points (bp) this week. 30! Why? It’s mostly about the Federal Reserve’s rate path.
It started with the October CPI data, which saw headline CPI climb 0.4% from September, while core rose 0.3% – both above expectations. The problem (for the Fed) is that core components drove it — not oil — raising concerns that inflation is broadening.
The Iran conflict was another factor, with yields rising almost 15bp after President Trump said, “we don’t need a deal with Iran,” potentially indicating a protracted stalemate that could keep oil prices elevated. (Interestingly, U.S. oil prices are down about $15 this month to $90 per barrel as feared post-midterm attacks haven’t materialized and President Trump said more strikes are “highly unlikely.”)
As a result, markets are now pricing nearly 90bp in Fed hikes by late 2027 – double what they priced just a week ago. And it’s not just markets expecting more hikes – Fed Governor Waller expressed openness to a 50bp hike next month, and Dallas Fed President Logan suggested a faster pace of hikes may be needed.
And yet, the Nasdaq-100® is up 4% this week. Some of it might be a bounce from last week’s post-election selloff, but there were developments in artificial intelligence (AI) trade, too.
Compute providers CRWV and NBIS both beat on third-quarter earnings estimates. However, CRWV rallied on increased revenue guidance while NBIS sold off on higher capex. Still, this leaves the Nasdaq-100® on pace for 51% per annum earnings growth in the third quarter. This comes alongside news that NVDA CEO Jensen Huang resigned yesterday.
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Next Week
Here are the top events I’m watching next week:
- Tuesday: Retail Sales (October), Industrial Production (October), NVDA Earnings (Q3)
- Wednesday: Fed Minutes (October)
- Thursday: Jobless Claims (week ending Nov. 13), WMT Earnings (Q3)
