Overnight US stocks | Expectations of a sharp Fed rate hike intensify; all three major indexes fall; NVIDIA Corporation (NVDA.US) extends its decline by 5.4%.

US October inflation rose more than expected, intensifying expectations of a sharp Fed rate hike. The three major indexes fell, Bitcoin briefly dropped below the US$73,000 mark, and the dollar index posted its largest single-day gain since September. [US stocks] As of the close, the Dow Jones Industrial Average fell 156.67 points, or 0.30%, to 52,233.08; the S&P 500 fell 28.99 points, or 0.38%, to 7,520.95; the Nasdaq Composite fell 187.26 points, or 0.74%, to 25,065.87. SK Hynix (SKHY.US) fell 3.5%, Microsoft Corporation (MSFT.US) fell 2%, Trump Media & Technology Group (DJT.US) rose 5%, and NVIDIA Corporation (NVDA.US) fell 5.4%, extending yesterday's decline. The Nasdaq China Golden Dragon Index closed down 1.2%. [European stocks] Germany's DAX30 index rose 107.87 points, or 0.41%, to 26,373.43; the UK's FTSE 100 fell 27.20 points, or 0.25%, to 10,755.67; France's CAC40 rose 45.29 points, or 0.55%, to 8,278.59; the Euro Stoxx 50 rose 42.50 points, or 0.68%, to 6,332.95; Spain's IBEX35 rose 191.62 points, or 0.97%, to 19,934.12; Italy's FTSE MIB rose 332.62 points, or 0.65%, to 51,732.50. [Forex] US October inflation data came in above expectations for a third consecutive month, and Fed Governor Waller's support for a December rate hike pushed the dollar index up more than 0.6% on Tuesday, its largest single-day gain since September. The market further increased bets on a 2027 rate hike and began pricing in a small possibility of a one-time 50-basis-point hike in December, after having fully priced in a 25-basis-point hike in December. Dallas Fed President Logan also supported at least two more 25-basis-point hikes. Major currencies broadly weakened against the dollar, with the Norwegian krone, Australian dollar and Swedish krona all falling more than 1%, while the yen fell 0.6% at one point. The market believes that as long as the Fed maintains its hawkish stance, the dollar still has room to strengthen further in the short term. [Cryptocurrencies] Bitcoin briefly fell below the US$73,000 mark, touching a low of US$72,669.28, and was at US$73,841 as of publication; Ethereum fell more than 3.5% to US$2,057. [Precious metals] Spot gold fell 2.6% to US$4,033.22; spot silver fell 3.53% to US$51.546/oz. [Crude oil] The price of light crude oil futures for December delivery on the New York Mercantile Exchange fell 81 cents to settle at US$86.04 per barrel, a decline of 0.93%; London Brent crude oil futures for January delivery fell US$1.08 to settle at US$91.49 per barrel, a decline of 1.17%. [Macro news] US October CPI cooled slightly but remained above expectations; energy cost pass-through effects may become more evident. Data from the US Department of Labor showed that headline CPI rose 0.4% in October, cooling from 0.6% in September but above analysts' expectation of 0.3%; core CPI rose 0.3% month on month, unchanged from September and also above analysts' expectations. Gasoline prices did not fall sharply last month and remained painfully high for drivers. But because gasoline prices also did not rise sharply, economists had not expected them to contribute much to October's overall price increase. This comes as some relief after months in which the Iran war pushed up energy prices and hit consumers' wallets. AAA data showed that the average gasoline price last month was US$4.32 per gallon, slightly down from US$4.34 in September. However, gasoline prices are still about 34% higher than before the Iran war broke out. The major question in the coming months is: to what extent will higher energy prices continue to seep into other areas of the economy and push prices higher more broadly? Some energy-sensitive industries are already showing stress, and companies that buy large amounts of fuel are passing on higher costs. Since the Iran war broke out in February, energy prices have climbed so much that some economists worry broader pass-through may still lie ahead. Fed Governor Bowman: Inflation still needs to be controlled, but the cost of further tightening must be weighed. Federal Reserve Vice Chair for Supervision Michelle Bowman said that inflationary pressures are still persisting, while the job market is stabilizing, and inflation still has room to fall further. She expects October core PCE to rise to 3.3% year on year, driven mainly by higher energy prices and AI-related demand, but the lack of progress on inflation is not caused by an overheated labor market. Bowman expects core PCE to move toward 2% next year as the AI construction boom and pressures from the Middle East conflict gradually fade. On policy, Bowman noted that recent declines in stock prices, rising US Treasury yields and a stronger dollar have already tightened financial conditions, while the economy has strengthened this year. She stressed that financial conditions have already tightened. Against this backdrop, the benefits of further monetary tightening must be carefully weighed against the costs to interest-rate-sensitive sectors. Whether AI demand can be sustained and how the political risk of GEO Group Inc evolves will be important factors determining the direction of monetary policy in the coming months. She did not explicitly call for a rate hike but stressed that the Fed still needs to bring inflation back to its 2% target. Living costs keep rising, and more Americans are falling into severe debt distress. According to CBS, a latest analysis by the nonpartisan think tank Urban Institute showed that about 24% of people in the United States with a credit record are delinquent on medical bills, student loans, auto loans or retail loans. The median amount of these debts is US$2,913. In communities of color, the proportion is as high as 30%, with a median debt collection amount of US$3,009. Breno Braga, a senior researcher at the Urban Institute, said: "The rising cost of living makes it harder for people to pay for basic living expenses." This year, the Fed has kept raising rates to curb inflation, which has also made it harder for people to repay debt. Braga added: "This reflects the current financial situation of Americans." According to the latest data from the New York Fed, total consumer credit card debt has soared to a record high of US$1.29 trillion, up nearly 70% from five years ago. EIA raises 2027 US gasoline and diesel price forecasts, reflecting the possibility that refined product supply tightness will last longer. The U.S. Energy Information Administration (EIA) raised its 2027 US gasoline and diesel retail price forecasts in its latest Short-Term Energy Outlook, with the diesel price forecast raised 12% from last month and gasoline up 5%. The EIA expects supply constraints in the global oil product market to persist until the end of 2027, with refined product crack spreads expected to remain at high levels and drive US refineries to maintain high utilization rates. At the same time, the EIA expects Brent crude prices to remain around US$100 per barrel for the rest of this year and to fall to an average of US$77 in the fourth quarter of 2027 as global inventories gradually recover. New York Fed: US household loan delinquency rate rises slightly; mortgage delinquency rate hits highest since 2018. The New York Fed's third-quarter Household Debt and Credit Report showed that the share of loan balances delinquent by at least 30 days rose to 5%, up from 4.7% in the second quarter; total household debt rose 1.8% quarter on quarter to US$19.1 trillion. Among them, the share of mortgage balances delinquent by more than 90 days rose to 1.13%, the highest level since the first quarter of 2018, and home equity line of credit balances increased by US$23 billion, the largest increase since 2005. The share of newly delinquent auto loans also rose, while student loan delinquencies slowed and credit card delinquencies improved. The New York Fed said that despite the rise in housing loan delinquency rates, overall credit quality remains sound. Fed's Logan: The Fed needs at least two more rate hikes of 25 basis points each. In her latest remarks, Fed's Logan said: "Excessive inflation is unacceptable. This winter the Fed may raise rates faster than it has so far. It is clear the Fed needs at least two more rate hikes of 25 basis points each. After two more hikes, it would be reasonable to pause and assess further action that may be needed. The current Fed policy rate is at least 50 basis points below a moderately restrictive level. Gradual policy adjustments can reduce the risk that economic activity deteriorates more than necessary. Wartime energy disruptions are not the only source of price pressure, and the sources of upward price pressure are not limited to tariffs, and this broad upward price trend may persist." [Company news] CoreWeave Q3 revenue beats expectations; debt pressure still in focus. Coreweave (CRWV.US) third-quarter revenue rose 167% year on year to US$3.66 billion, above the market expectation of US$3.55 billion, with a loss per share of US$1.27, better than the expected loss of US$1.46. The company raised its full-year revenue guidance to US$13 billion to US$13.3 billion from US$12.4 billion to US$13.2 billion. After the results were announced, the stock rose as much as 8.7% after hours and has now narrowed to about 2%; it had fallen more than 40% over the past month and 32% year to date. The company still faces heavy debt pressure, with debt exceeding US$50 billion as of the end of June and a yield of about 15.2% on its 2030 bonds. The company's CEO said its investments are based on signed customer contracts, customer prepayments also help support data center construction, and the existing order backlog is sufficient to cover debt obligations. Microsoft Corporation (MSFT.US) previously said some emerging cloud service providers' data center projects were delayed and that it had tightened project oversight and exited some high-risk projects. After the US midterm elections, several newly elected officials also said they would slow or block data center construction, adding uncertainty to the industry's expansion. CoreWeave said it plans to expand revenue by launching new services and expanding into Asian markets. US AI computing power futures market launch hits obstacles. According to reports, American Financial Group, Inc. market regulators delayed approval of futures contracts linked to AI chip rental prices, dealing a setback to exchanges' plans to launch the first computing power futures market. Such contracts allow traders to bet on AI chip rental prices. According to people familiar with the matter, the US Commodity Futures Trading Commission (CFTC) decided to extend the review period for such contracts by at least 60 days. This means related trading activity will be delayed until at least early 2027. The decision has not yet been made public. CME Group Inc. Class A had previously hoped to launch as early as October graphics processing unit (GPU) futures contracts linked to the rental prices of two NVIDIA Corporation (NVDA.US) chips, the H100 and B200. The related price index was designed by startup Silicon Data. The delay comes as regulators seek public comment on how to manage risks in the emerging computing power market. Currently, online trading platforms already offer spot computing power price trading, but there is not yet a public futures market for longer-term contracts.