Fed Weighs Bigger Hikes After Hot CPI as CoreWeave Revives AI Trade
Hot October inflation has Fed officials debating a half-point hike in December, pushing the 10-year yield to the 5% line and the dollar to its highest since April 2025. CoreWeave's earnings then spark a big AI rebound in chip, memory and power stocks.
Transcript
Alex: Welcome to Finance TL;DR Daily, the podcast where we break down the biggest stories in finance. It's Wednesday, November eleventh. Hot inflation has Fed officials debating bigger rate hikes, while a blowout report from CoreWeave is reviving the AI trade.
Riley: Here's what's moving today: Fed officials weighing a faster pace of hikes after October's inflation surprise, and CoreWeave's earnings pulling the AI trade off the floor.
Alex: Stocks slipped at Tuesday's close, the Nasdaq down about three-quarters of a percent, but Nasdaq 100 futures are up about three percent this morning on the back of CoreWeave.
Riley: If you carry a mortgage, a car loan or a credit card balance, this is the story. The Fed's debate has moved from whether to keep raising rates to how fast. October consumer prices rose 0.4% against 0.3% expected, and core, which strips out food and energy, rose 0.3% against 0.2%.
Alex: Bond traders reacted fast. The 10-year yield closed Tuesday at 4.98% and briefly poked above 5% during the session. It's at 5% again this morning.
Riley: I'd say the two-year is the better tell, though. It jumped 17 basis points to 4.73%, its biggest one-day move since the April 2025 tariff rollout. That's the part of the curve closest to Fed expectations.
Alex: So who's pushing for what?
Riley: Governor Waller said a half-point hike could be considered in December. Dallas Fed President Logan said the Fed needs at least two more quarter-point increases. And Chicago's Austan Goolsbee called it, quote, "another distressing report, borderline disturbing."
Alex: Borderline. From a central banker, that's practically shouting.
Riley: Though he also said he'd rather not box in policymakers before they meet. The rate sits at 3.75% to 4% after a September hike and an October hold.
Alex: Which makes October look less like a pause and more like a breather.
Riley: That's my read, yes. Nobody's talking about going back to holding.
Alex: What are markets pricing for December?
Riley: CME FedWatch shows a 91% chance of a quarter-point hike and 9% for a half-point. Traders on Kalshi put a December hike at about 96%, with roughly a 12% chance of something bigger than a quarter-point.
Alex: So December is basically settled. The size is the open question.
Riley: And Logan's two-more-hikes comment says the path matters more than December itself.
Alex: I'd put the dollar on equal footing. The dollar index rose more than half a percent Tuesday to its highest since April 2025, and it's higher again this morning. That squeezes multinationals and anyone holding dollar debt.
Riley: Fair, but the dollar is following the yields. The two-year is where the Fed's thinking shows up first.
Alex: Then it's a draw. Both are saying the same thing.
Riley: The thing to remember: December looks like a hike, and the live debate is whether it's a quarter-point or a half.
Alex: And equities got a jolt this morning that has nothing to do with the Fed. If your portfolio leans on tech, the worry behind the recent AI selloff was who pays for the buildout. CoreWeave just gave an answer.
Riley: Go on, then.
Alex: Third-quarter revenue climbed 168% to $3.66 billion, ahead of the roughly $3.55 billion analysts expected. The company raised its 2026 revenue forecast to between $13 billion and $13.3 billion. The stock jumped about 25%.
Riley: A beat is nice. The funding was the point, though.
Alex: Agreed. Management expects about $9 billion in customer prepayments and deposits over the next three months. And CFO Nitin Agrawal said, quote, "At current yields, we do not intend to issue additional parent-level unsecured debt through 2027."
Riley: At current yields. With the 10-year back at 5%, that's a conditional worth noticing.
Alex: It is. But for a company that investors feared would keep borrowing, no new unsecured debt is a big relief.
Riley: How far did the relief spread?
Alex: By midday the Nasdaq 100 was up about 2.8% and the S&P 500 about 1.4%. Nvidia recovered roughly 3.8% after losing about $430 billion in market value over the previous two sessions.
Riley: Four hundred and thirty billion. Gone in two days and a good chunk back in one morning.
Alex: Not a chunk that large. Four percent of its value doesn't cover that.
Riley: Fair. A dent, then, not a repair.
Alex: The power and memory names ran harder. SanDisk gained nearly 16%, and Bloom Energy about 15.5%.
Riley: The market read it as proof the demand is real, not just the spending. I'd hold off on that. CoreWeave still posted a GAAP net loss that widened to $709 million, or $1.27 a share.
Alex: And short seller Jim Chanos said, quote, "They need to do another equity deal soon, IMO."
Riley: So the debt worry may have turned into a dilution worry.
Alex: Possibly. But today the market is rewarding the prepayments, not the loss.
Riley: The thing to remember: one earnings report eased the AI funding fear, and whether it holds across the sector is still unanswered.
Alex: A hawkish Fed on one side, an AI rebound on the other.
Riley: Money is getting dearer, and the market is betting the AI buildout can still afford it.
Alex: This has been Finance TL;DR Daily. If it was useful, follow the show wherever you're listening. We'll see you tomorrow.
In this episode
- Fed officials weigh bigger, faster rate hikes after hot October inflation. The dollar hits a 19-month high and Treasuries slide as markets price in a December hike. — source
- CoreWeave's earnings revive the AI trade. The stock jumps about 25%, the Nasdaq 100 gains roughly 2.8%, and chip, memory and power stocks surge. — source
Educational content only — not financial advice.