US Market Wrap: Tech leads losses; Hawkish Fed bets trimmed on soft headline PPI

• SNAPSHOT: Equities down, Treasuries down, Crude flat, Dollar up, Gold flat.
• REAR VIEW: US headline PPI cooler than expected, core matches forecasts; Fed's Collins said it's possible the Fed may have to raise rates more than expected; Mossad Director reportedly in Washington for talks with senior Trump admin officials on the Iran war; NVDA board downplays speculation it has formally approached potential CEO candidates, while FT reports Arm CEO was approached; Anthropic's IPO reportedly around 6x oversubscribed; NEC Director Hassett rejects reports that he is set to leave the role in the coming weeks.
• COMING UP: Data: Chinese Activity Data (Oct), Canadian Inflation (Oct) Events: ASEAN Summit (16-18 Nov); UK Milburn Review Speakers: BoJ’s Takata; ECB’s Vujčić; Fed’s Williams; Fed Chair Warsh; UK PM Burnham Supply: Japan, Netherlands
• WEEK IN FOCUS: Highlights include: US Retail Sales, FOMC Minutes, Chinese Activity Data, PBoC LPR, RBA Minutes, UK Inflation and UK Jobs. Access full report here.
• WEEKLY US EARNINGS ESTIMATES: Access full report here.

Equities were lower on Friday, with the Nasdaq underperforming as selling in Tech and AI stocks continued amid ongoing turmoil at Nvidia following Jensen Huang's departure, while Cisco's softer AI orders from hyperscalers added to the pressure. The FT reported that the NVDA board had approached Arm (ARM) CEO Rene Haas, though Nvidia later said it had not formally approached any candidates. Tech was the notable sector laggard, followed by Consumer Discretionary and Industrials, while Consumer Staples and Energy outperformed.

The Treasury curve steepened, with the front end supported by risk-off sentiment and a softer-than-expected PPI report, which eased fears of a 50bps December hike after Tuesday's hot CPI. The long end came under pressure as oil prices rose after Axios reported that the Mossad Director was in Washington for talks on the Iran war. Fed speak remained hawkish, with Goolsbee saying the Fed is not on a credible path back to 2% inflation and Collins warning rates may need to rise more than expected.

The Dollar extended its gains to a new YTD high, supported by higher long-end yields and hawkish Fed commentary. USD/JPY was little changed on net, despite sharp, volatile moves that fuelled persistent rate-check speculation. Gold trades flat at the time of writing.

US PPI (FRI): The October PPI report leaned soft, with headline prices rising 0.3% M/M, cooling from September's 1.4% increase and below the 0.4% forecast. The Y/Y rate accelerated to 6.5% from 6.3%, although it remained below the 6.6% consensus. Core PPI was in line with expectations at 0.3% M/M, slowing from the prior 0.8%, while the Y/Y rate held steady at 5.0%. The softer-than-expected report offered some relief from inflation concerns following Tuesday's hot CPI print, which reignited debate around a potential 50bps Fed hike in December after Governor Waller suggested such a move may be warranted if October core CPI came in around 0.3% or higher, a threshold subsequently met. The softer PPI data could strengthen the case for a more measured 25bps hike rather than a 50bps move. Within the report, PCE-relevant components showed slower increases in air passenger transport and portfolio management prices, while healthcare prices were mixed. The data prompted a dovish reaction, with equities, Treasuries and gold rising, and the Dollar coming under pressure, before the moves pared somewhat.

WILLIAMS (voter): Said the economy has been resilient and growth has been strong, adding that the US economy is getting stronger but not overheating. The New York Fed President said inflation is too high and stubbornly persistent, noting the Fed has been steadily gathering data. Williams concluded that the Fed still has work to do to get monetary policy to the right place and will need to take further action over time to bring inflation back to 2%.

GOOLSBEE (2027 voter): Warned that inflation has shown signs of trouble for several consecutive months, with little progress towards the Fed's 2% target, and inflation remaining elevated for almost six years. He expressed particular concern that price pressures are becoming more widespread, highlighting persistent services inflation that is unlikely to be explained by tariffs or energy costs alone. Goolsbee noted that the impact of supply shocks has lasted longer than expected, while stronger demand, partly driven by AI-related data center investment, could be contributing to inflationary pressures. On the labour market, he described employment conditions as stable but potentially tightening, warning that wage growth tends to lag inflation and that current price pressures could feed into wages over the coming months. Regarding monetary policy, Goolsbee stressed that the Fed still has work to do and is not currently on a credible path back to 2% inflation. He declined to commit to a particular rate path, noting that the pace of further hikes will depend on the inflation outlook, with renewed progress potentially allowing rates to settle towards their longer-run level, while further deterioration would warrant a different policy response.

DALY (2027 voter): Said inflation is the key problem facing the Fed, and that her bias is for rates to go up, adding that it is hard to argue policy is restrictive enough and that the Fed will in all likelihood need to hike. She flagged that a myriad of factors are pushing inflation higher, which makes it particularly concerning, and said there is not much evidence yet that AI is lifting labour productivity. Daly described consumer spending as surprisingly resilient but said she is watching holiday-season behaviour closely given rising prices, as well as how the gap between weak sentiment and solid spending eventually closes, noting she is just starting to hear signs that the consumer may be running out of gas.

COLLINS (2028 voter): Said she is laser-focused on the data but does not put too much weight on any one report. She does not want to get carried away with how high rates should go, or how quickly, and sees a tighter policy path than she had previously pencilled in. The Boston Fed President added that the Fed may have to raise rates more than expected. Collins thinks additional tightening is required soon, and when asked about a potential 50bps move, she endorsed a careful adjustment of policy. On inflation, she reiterated that the direction is clear and less promising than hoped, adding that it is too high and appears to be broadening.”

T-NOTE FUTURES (Z6) SETTLED 8+ TICKS LOWER AT 105-06

Yield curve steepens after soft PPI. At settlement, 2-year -1.2bps at 4.872%, 3-year -1.0bps at 4.930%, 5-year +0.8bps at 4.980%, 7-year +1.5bps at 5.055%, 10-year +2.0bps at 5.153%, 20-year +2.3bps at 5.528%, 30-year +2.3bps at 5.481%.

THE DAY: The Treasury yield curve steepened on Friday, with front-end yields moving lower, seemingly supported by risk-off sentiment and the softer-than-expected US PPI report.

The October PPI report leaned soft, with headline inflation cooling more than expected, while core PPI was in line with forecasts but slowed from the prior month. The softer report offered some relief following the hotter-than-expected October CPI print earlier in the week, which had reignited concerns over inflation and the possibility of a 50bps Fed hike in December. As a reminder, Fed Governor Waller suggested he could support a half-point move if October core CPI came in around 0.3% or higher, a threshold subsequently met. However, the softer PPI report could strengthen the case for a more measured 25bps hike rather than a 50bps move.

Following this week's inflation reports, Bank of America expects 25bps rate hikes in December, January and March. Fed commentary also remained in focus, with Goolsbee (2027 voter) reiterating concerns over inflation, noting that the Fed still has work to do and that the pace of tightening will depend on inflation progress. Collins stressed that she remains focused on incoming data rather than individual reports and warned that rates may need to rise further than expected, although she continued to favour a careful approach to policy.

Elsewhere, risk sentiment deteriorated amid renewed selling in technology and AI-related stocks, with the Nasdaq underperforming. The risk-off move may have provided additional support to Treasuries following the opening bell. However, rising oil prices offered an offsetting headwind after Axios reported that the Mossad Director was in Washington for talks with senior Trump administration officials on the Iran war.

Looking ahead, attention turns to next week's US retail sales report and FOMC Minutes. Although the minutes may be viewed as somewhat stale following the latest inflation developments, investors will scrutinise the discussions for indications of policymakers' appetite for further tightening and the potential pace of future rate hikes.

• Fed Hike Pricing via CME FedWatch: Dec 27.1bps (prev. 28.3bps), Mar 62.3bps (prev. 65.1bps).
• EFFR at 3.88% (prev. 3.88%), volumes at USD 99bln (prev. USD 98bln) on November 12th
• SOFR at 3.90% (prev. 3.89%), volumes at USD 3.138tln (prev. USD 3.159tln) on November 12th
• NY Fed RRP op demand at USD 0.325bln (prev. USD 0.25bln) across 1 counterparty (prev. 1) on November 13th.

WTI (Z6) SETTLED USD 0.18 LOWER AT USD 88.56/BBL; BRENT (F7) SETTLED USD 0.02 HIGHER AT USD 95.84/BBL

The crude complex was more or less flat on Friday but posted losses on the week, with no notable Middle East developments in the session. Earlier in the week, there was optimism that a US-Iran peace deal was getting close, but the geopolitical environment now remains uncertain on both the Russia-Ukraine and US-Iran fronts. Newsflow was sparse on Friday, and participants now await any de- or re-escalatory rhetoric over the weekend. However, Axios, citing sources, reported that the Mossad Director was in Washington on Friday for talks with senior Trump administration officials on the Iran war. The report added that Israeli PM Netanyahu is pressing Trump to resume the war, although the President has so far rejected that pressure. In the weekly Baker Hughes rig count, oil was unchanged at 463, and natgas fell by 4 to 127, leaving the total down 3 at 601. Highlighting the narrow ranges relative to recent sessions, WTI traded between USD 87.80-89.64/bbl, while Brent hit a low of USD 95.06/bbl vs. a high of USD 97.13/bbl.

CLOSES: SPX -0.40% at 7,562, NDX -1.22% at 27,944, DJI +0.10% at 52,348, RUT -0.28% at 2,791

SECTORS: Technology -1.7%, Consumer Discretionary -0.45%, Industrials -0.42%, Materials -0.2%, Real Estate flat, Communication Services +0.26%, Utilities +0.4%, Health +0.56%, Financials +0.8%, Energy +0.96%, Consumer Staples +1.39%.

EUROPEAN CLOSES: Euro Stoxx 50 -0.16% at 6,389, Dax 40 -0.06% at 26,757, FTSE 100 +0.36% at 10,903, CAC 40 +0.09% at 8,369, FTSE MIB +0.10% at 51,859, IBEX 35 +0.27% at 20,020, PSI +1.06% at 9,698, SMI -0.29% at 15,106, AEX +0.07% at 1,141

STOCK SPECIFICS:

• Nvidia (NVDA): Nvidia's board told CNBC it has not formally approached any potential candidates and that any speculation is premature, according to a CNBC reporter on X. Earlier, the FT reported that Nvidia's board approached Arm (ARM) CEO Rene Haas as a potential successor to Jensen Huang. Meanwhile, Nvidia's lender consortium is in flux after Huang's departure, the NYT reported, citing sources; no loans have closed, and at least one of the six lenders that had agreed to the financing was on Thursday discussing dropping out.
• Microsoft (MSFT): On the outage, said it addressed the underlying issue and continues to restore service to remaining customers and regions.
• Cisco Systems (CSCO): Slowing product order growth and softer AI orders from hyperscale customers overshadowed strong results and guidance.
• Cerebras Systems (CBRS): EPS and revenue beat, with strong next-quarter guidance and a lifted FY26 top-line outlook.
• Flowers Foods (FLO): Top and bottom lines light; lowered FY view.
• Modine Manufacturing (MOD): Samsung Electronics is reportedly in talks to acquire the company.
• Palo Alto Networks (PANW): Upgraded at KeyBanc.

USD continued its broad-based strength against major peers, advancing the most against CHF, the Antipodeans and the Euro. Long-end yields advanced again, helping the Buck, while short-end yields traded lower in response to softer-than-expected headline PPI M/M and Y/Y figures (core was in line). In equities, losses were led by tech, as the recent NVDA turmoil continues to weigh while the CEO search gets underway.

Geopolitical updates were few, leaving the focus on Fed speak. Most notably, 2027 voter Goolsbee said the Fed is not currently on a credible path back to 2% inflation, and 2028 voter Collins said additional policy tightening is required soon. DXY has gained for the fourth day this week and for three consecutive weeks, trading at a new YTD high of 103.42.

JPY was little changed against USD on net, despite sharp, volatile moves that fuelled persistent rate-check speculation.