Bloomberg Surveillance 11/10/2026

Federal Reserve Policy Shift

• Governor Chris Waller signaled a potential 50-basis point interest rate hike in December if inflation metrics worsen, stating such a move would be necessary to protect the Fed's credibility.
• Waller established a specific threshold: core CPI month-over-month readings of 0.3% or higher could trigger the "jumbo" hike, compared to the standard 25 basis point increase.
• The October CPI print confirmed Waller's concern, coming in at 0.4% headline and 0.3% core, beating expectations of 0.3% headline and 0.2% core.
• Fed officials, including Austin Goolsbee and Tom Barkin, have adopted a collectively hawkish tone to correct market expectations that had priced out a rate hike for the current cycle.
• Deirdre Dunn (Citi) and Tiffany Wilding (PIMCO) noted that while a 50bp hike is "on the table," the consensus leans toward a gradual 25bp hike to avoid slamming the brakes on growth driven by AI investment.
• David Kelly (J.P. Morgan Asset Management) argued against the 50bp hike, citing low wage growth (wages remain below inflation for seven consecutive months) and a likely moderation in energy prices as evidence that the Fed should not overreact to one data point.

CPI Data Details and Market Reaction

• The hot CPI print was driven by rising costs in services ex-housing (super core) at 0.5%, food (0.5%), electricity (0.9%), and intercity transportation (6.6%).
• Energy price pass-throughs are visible in motor vehicle insurance (+0.7%) and delivery services (+1.8%), raising concerns about second-round inflationary effects.
• Bond markets reacted immediately to the data and Waller's comments, with 2-year yields spiking 11-12 basis points to roughly 4.69% and the front end of the yield curve whipsawing.
• Equity futures, particularly the Nasdaq, declined sharply as investors priced in the increased probability of aggressive tightening and its impact on tech valuations.

Anthropic IPO Developments

• Anthropic has officially launched its IPO roadshow, seeking to raise approximately $64.4 billion through a public offering and a $26 billion private placement.
• The company is targeting a fully diluted valuation of roughly $1.4 trillion, down from earlier whispers of $2 trillion but still positioning itself as one of the largest IPOs in history.
• Share pricing has been set between $70 and $78 per share, following a "rookie mistake" where a preliminary email leaked an incorrect range of $70-$80 which was quickly retracted.
• Key tech giants including NVIDIA, AMD, Broadcom, Microsoft, Google, and TSMC are among the investors committing significant capital, raising concerns about circular financing structures within the AI sector.
• Financial filings revealed rapid revenue growth, with a run rate of $81 billion in October, up $10 billion from the previous month and $17 billion in Q3 revenue compared to $1.4 billion a year prior.
• The prospectus explicitly disclosed an existential risk, stating there is a 1 in 10 chance their technology could be misaligned to cause harm to humanity.

NVIDIA Scandal and Government Relations

• NVIDIA faces intensifying scrutiny after sources revealed its general counsel intervened in a U.S. Commerce Department probe into Megaspeed International, a company linked to alleged chip smuggling and an affair between CEO Jensen Huang and a suspected Chinese spy.
• Reports indicate that following NVIDIA's inquiry, the Commerce Department muzzled investigators, requiring all requests regarding the case to be routed through the department head contacted by the company.
• The Justice Department subsequently paused the probe, raising questions about the "cozy" relationship between the government and NVIDIA, particularly given the Trump administration's arrangement to receive a 15% cut of NVIDIA's advanced chip sales to China.
• Major financial institutions, including Citi, Mizuho, and Wells Fargo, have cut NVIDIA price targets citing "key person risk" and uncertainty regarding CEO sustainability.
• Scott Lincecum (Cato Institute) warned that the intermingling of regulatory authority and financial incentives creates a conflict of interest that could lead to tighter congressional scrutiny of export controls.

Oil Markets and Geopolitics

• Crude oil prices fell to their lowest levels since early September, dropping below $90 per barrel following President Trump's comments suggesting the war with Iran is effectively over.
• President Trump stated that while the U.S. remains "locked and loaded," the immediate path favors diplomacy and the status quo, reducing the immediate geopolitical risk premium on energy.
• Despite the rally in oil prices earlier, Amrita Sen (Energy Aspects) noted that a "new normal" of high freight costs and shipping risks persists, with diesel tightness remaining a concern for winter demand.
• The drop in oil prices provided a counterbalance to rising yields, driving a bid into the long end of the Treasury yield curve (30-year yields) while the front end remained volatile due to Fed policy fears.

Broader Market Context

• The S&P 500 is trading near "tariff lows" with valuations down roughly 30% year-over-year, creating a setup for a potential relief rally if sentiment improves, according to Cameron Dawson (New Edge Wealth).
• Investor positioning has reached the 20th percentile, suggesting significant "dry powder" on the sidelines that could be chased in if volatility subsides.
• The semiconductor sector faces a divergence in expectations: sell-side earnings estimates project continued growth into 2028, while valuations (trading at 14.5x earnings) price in a peak in the 2027-2028 cycle.
• TSMC reported stellar earnings, reinforcing the fundamental strength of the chip ecosystem despite the volatility surrounding NVIDIA and the AI narrative.
• Market participants are closely watching the interplay between the Fed's potential tightening, the Anthropic IPO success, and the stability of the NVIDIA leadership as key determinants for the broader tech trade.