CoreWeave Leads Tech Higher

MACRO FRAME

Resilient hiring and persistent core price pressures keep the Fed focused on further tightening even as uncertainty over AI investment clouds the growth outlook.

STOCK INDEX FUTURES

Equity index futures rebounded overnight, with tech leading gains following CoreWeave’s results that eased immediate concerns about demand and financing. CoreWeave rose approximately 10% in premarket trading after raising its annual revenue forecast and stating that cash flow from existing contracts would cover current and future debt repayments. The company also said it would not tap unsecured debt markets following the recent increase in borrowing costs. Nvidia gained approximately 5%, while Nebius, Iren, Oracle and Applied Digital advanced between 4.7% and 11.8%.The results provided reassurance that strong AI demand is translating into revenue, but did not eliminate concerns about capital intensity or future returns. CoreWeave acknowledged that greater scrutiny could slow industry-wide data-center construction, although management did not expect a material change to its own expansion plans or costs. Nvidia also remained exposed to export-policy uncertainty following reports that a blacklisted Chinese university obtained H200 chips. Bipartisan calls for stronger controls and congressional oversight add another potential constraint on sales to China, even as demand elsewhere remains strong.

The earnings-led recovery faces a less supportive interest-rate backdrop. October core CPI increased 0.3% for a third consecutive month, keeping pressure on the Fed to tighten further. Thursday’s results from Applied Materials, Cisco and Nebius will provide additional tests of the AI spending cycle, while Friday’s PPI report will help determine whether inflation concerns continue to offset improving corporate sentiment.

CURRENCIES

US DOLLAR: The USD index firmed 0.45% higher to 102.696, breaking above the 102.500 level since October 15. The 102.500 level has previously served as a strong level of resistance, but renewed Fed tightening expectations have lead the current breakout move higher. Friday’s PPI data offers the earliest test of whether the index can sustain a hold above this level. October CPI and comments from Fed Governor Waller have lead the market to price nearly 75 bps of tightening by September 2027. Markets are fully priced for a December and March hike. October’s inflation figures offered little evidence of a decisive break in underlying price pressure. The report favors the dollar’s interest-rate support, even as falling oil prices could improve the outlook for subsequent months.

EURO: The euro is 0.50% weaker at $1.1107, pressured by dollar strength. German inflation data for October was confirmed at -0.1% m/m in October; the fall in headline prices was thanks to slower energy price growth. Lower oil prices provide a more favorable backdrop for the euro area, but near-term trading remains sensitive to US rate expectations which have moved in favor of the dollar. The persistence of monthly US core inflation limits the scope for treating the decline in energy prices as a move to favor the euro. Markets assign roughly a 80% probability to a December hike and are fully priced for a rate hike in February. The ECB’s hawkish hold and forward guidance has all but guaranteed a rate hike at the bank’s meeting in December. The euro’s upside, however, is likely to be contained by the prospect that December’s rate hike will be followed by a pause.

BRITISH POUND: Sterling fell 0.43% to $1.3283. Attention turns to Thursday’s UK GDP report, with forecasts expecting third-quarter growth of 0.7%. A firm reading could reinforce expectations for further BoE tightening, although sterling remains sensitive to relative US–UK rate expectations. Against the euro, the pound was broadly steady near 83.6. The BoE’s increase to 4% and indications that further tightening may happen provide a domestic source of support. However, Governor Andrew Bailey cautioned that the increase was not necessarily the start of a lengthy hiking cycle, but indicated that another move would likely be needed unless the Middle East conflict is resolved. With markets already anticipating three quarter-point increases next year, sterling remains sensitive to any guidance that tempers those expectations. While the UK economy has shown resilience over recent months, the bank will likely remain cautious against future rate hikes to avoid slowing its fragile growth backdrop.

JAPANESE YEN: The yen is 0.52% weaker at 159.57 yen per dollar, its lowest level in over two months. Expectations for further Fed tightening supported the dollar, leaving the yen under pressure despite the prospect of additional Bank of Japan increases. The approach toward 160 also places renewed focus on a widely watched psychological level. Money markets are fully-priced for a rate hike in March and see 62 bps of tightening over the next 12 months. With the bank now cautious about overshooting its inflation target, it could potentially speed up the rate of hike from roughly every six months to every three months, leaving the door open for a hike at the December meeting.

AUSTRALIAN DOLLAR: The Aussie is down 0.19% to $0.6852. Strong US data and domestic figures continue to weigh on the Aussie: consumer confidence fell to a four-year low, while business conditions remained negative following five RBA hikes this year. The domestic data points to signs that rate hikes from the RBA are working and could set up conditions for inflation to begin to moderate. Markets expect that Australian rates have peaked, with a quarter-point cut fully priced by the end of 2027.

TREASURY FUTURES

Yields moved higher across the curve. The two-year yield rose almost 21 bps on Tuesday in response to the inflation data and Waller’s comments. US cash Treasury markets are closed Wednesday for Veterans Day. Three-month annualized core CPI is 3.75%, above the six-month rate of 2.69% and the 11-month annualized rate of 2.92%, reflecting a firming momentum. Governor Christopher Waller said before the release that a core increase of 0.3% or more would warrant considering a half-point December hike. The report met that threshold, but a larger move remains a risk scenario rather than the base case. Friday’s PPI report is the next inflation test. The combination of resilient employment, persistent price pressures, and strong economic growth continue to support subsequent tightening beyond December.

Interested in more futures markets?  Explore our Market Dashboards here.