On Tuesday, October headline CPI rose 0.4% month over month, while core CPI increased 0.3%. Treasury yields surged as markets repriced Fed policy, briefly pushing the 10-year back above 5%.
However, renewed enthusiasm across the AI ecosystem challenged the durability and severity of the current risk-off INFLATION Market Regime. Strong demand for Anthropic’s prospective IPO and CoreWeave’s beat-and-raise helped AI-related stocks rebound following last week’s selloff.
From our Tuesday Leadoff Morning Note: “The fact that AI stocks are not following through on last week’s carnage amid this [NVIDIA scandal] signals growing investor fatigue in the bear case. Amid relatively light positioning, the upside risk is that the Anthropic $ANT IPO is oversubscribed and gaps higher in the secondary market, signaling renewed enthusiasm for the trade.”
The longer-term risks have not disappeared. Resistance to data-center development continues to grow across the political spectrum, potentially threatening future returns on AI infrastructure investment. Meanwhile, diplomatic progress between the U.S. and Iran may reduce pressure on energy prices, but renewed shipping attacks show that geopolitical and inflation risks remain elevated.
Will renewed enthusiasm for AI overcome persistent inflation, rising interest rates, and growing political resistance to the infrastructure buildout?
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