US EQUITY OPEN: Indices hit on hot CPI and hawkish Waller

OPEN: US indices opened in the red, weighed on by hawkish remarks from Fed’s Waller and the subsequent hotter-than-expected US CPI report. Before the data, Waller said a half-point rate hike may be needed in December if October core CPI came in around 0.3% or higher (which it did), though he would support a quarter-point hike even if CPI improves, adding that further tightening will be needed. After the CPI release, in which both headline and core M/M figures topped consensus, a broad-based hawkish reaction followed. Treasuries, US equity futures and spot gold fell, while the Dollar gained. Money markets now fully price a 25bps hike in December, with a c. 10% probability of a 50bps move. Sectors are broadly in the red, with Energy and Technology the laggards. Energy is weighed on by weakness in the crude complex amid continued constructive rhetoric between the US and Iran. In Tech, Nvidia is lower again, pressured by reports that the alleged Chinese spy linked to CEO Huang facilitated the sale of at least USD 7.5bln in chips to China. In FX, the Aussie is the underperformer, weighed on by the risk tone and overnight Chinese data. Looking ahead, Fed’s Logan, Schmid, Bowman and Paulson are scheduled, alongside the US 10yr auction and the EIA STEO. After-hours, weekly private inventory data and CoreWeave earnings are due.

• Nvidia (NVDA): CEO's affair with alleged Chinese spy facilitated the sale of at least $7.5bln in chips to China
• Anthropic targets a modest $1tln market value in its IPO
• Lam Research (LRCX), Micron Technology (MU), Nvidia (NVDA): Have been removed from the US 1 list at BofA
• Take-Two Interactive (TTWO): Narrower-than-exp. Q loss & unprecedented pre-orders for GTA VI
• Lucid Group (LCID): Deeper loss per shr. than exp. & rev. light
• Rocket Lab (RKLB): Profit light & sees larger-than-exp. next Q adj. EBITDA loss
• Hims & Hers Health (HIMS): Surprise Q loss, rev. missed & downgraded FY guidance

The sequencing here is the familiar one: an official sketches a conditional threshold ahead of a release, the print lands on the hawkish side of it, and the front end reprices within minutes. In past episodes of this kind the CPI day move tends to be sharpest in the two-year and in rate-futures pricing of the immediate meeting, with the tail of the distribution, here a larger hike versus the base-case quarter point, doing most of the work in the first hour before fading unless corroborated. The pattern to note is that a beat landing on a pre-committed conditional, as this one did, carries more weight than a beat alone, since it converts guidance into a de facto signal. What has historically decided whether such sessions stick is follow-through from the subsequent slate of speakers and the reception at the long-end auctions, both on the calendar today, and whether the inflation-sensitive corners, gold, the high-multiple tech cohort, confirm the pricing rather than diverge from it. The cross-asset mix otherwise fits the textbook reaction: dollar up, front-end yields up, gold and equity futures down, with the energy leg running on its own supply-side thread rather than the data. The stock-specific items are largely idiosyncratic, though the chip-complex geopolitical overhang and the removal of the semiconductor names from a prominent bank list are the kind of second-order flow that can extend a macro-driven tech selloff beyond the session.