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Inflation and the Fed
Chicago Fed President Austin Goolsbee called October's hotter than expected inflation report "borderline disturbing." The Consumer Price Index rose 0.4% last month. Core CPI rose 0.3%. Both came in above what forecasters expected.
Goolsbee pointed to steady services inflation and price pressures tied to tariffs. He also named demand from the AI data center buildout as another possible source of inflation, saying price pressures are spreading past energy and tariffs. Asked about a bigger rate hike in December, he gave no specific signal. He said getting inflation back to the Fed's 2% target is essential and that prices are moving the wrong way. This read softer than the message a day earlier from Christopher Waller, who hinted at a 50 basis point hike.
Fed speak has stayed fairly hawkish so far.
Mortgages and housing
Mortgage rates jumped sharply, ending a four-week drop after the inflation report shook bond markets. The average 30-year fixed rate rose 12 basis points in one day to 7.3%, the biggest single-day jump in over a month. The move came right as lower borrowing costs had started pulling some buyers back.
Mortgage applications rose 6.2% last week, with purchase applications up 8%, per the Mortgage Bankers Association. Purchase applications are still down about 18% from a year ago, showing how much high borrowing costs keep weighing on housing demand.
Microsoft and the Chinese optical chip ban
Microsoft (MSFT) is reportedly pushing the Trump administration to spare Chinese optical companies, according to Reuters. The US government wants to ban Chinese optical transceivers used in data centers, worried that Beijing could steal data or plant malware. US trade groups warn a ban could slow the data center rollout because American makers like Coherent (COHR) and Lumentum (LITE) lack the scale. China controls two-thirds of the optical market, per Counterpoint Research. Some of the firms that supply that market globally, including to US hyperscalers, have landed on a Pentagon list. The situation is messy.
Nvidia chips slip past controls
Reuters also reported that a Chinese university with ties to the military bought Nvidia (NVDA) H200 chips last month despite being on a US export blacklist. The university reportedly bought two chips for $120,000 while under US sanctions. This shows the gaps in US efforts to limit China's access to the technology. The news comes as markets watch the fallout from CEO Jensen Huang's affair with a suspected Chinese spy.
Tomorrow's watch list
Nebius (NBIS) earnings are a focus. The bar feels very high after CoreWeave (CRWV) reported. The NeoCloud is expected to post a loss of 61 cents on revenue of about $916.78 million. The market is looking closely at the economics of its contracts and its capex spend, as the company spends aggressively to stay competitive.
More tech earnings are due from Cisco (CSCO), Applied Materials (AMAT), and Cerebras. On data, there are weekly jobless claims and existing home sales for more read on housing. More Fed speak is set from Hammack, Barr, and Goolsbee.
