What moved
- US: Wall Street closed Monday sharply higher. The S&P 500 rose 2.35% to 7,549.94, the Nasdaq Composite 2.74% and the Dow 2.15%. Futures are the only live read on today. S&P 500 futures are down 0.59% and Nasdaq 100 futures 1.1%, with most of the drop coming after the 08:30 ET inflation data.
- Europe: The DAX is trading 1.17% higher, within half a percent of its 52-week high. The CAC 40 is up 1.15%, the Euro Stoxx 50 1.07% and the FTSE 100 0.4%.
- Asia: Asian markets closed strongly. The Kospi rose 4.39%, the Nikkei 2.87% and Taiwan 2.52%. China barely moved: the Hang Seng gained 0.44% and Shanghai 0.08%.
Why
The morning's turn comes from inflation. October CPI rose 0.4% on the month against 0.3% expected, and core prices, which exclude food and energy, rose 0.3% against 0.2%. The Fed is now openly debating how far to raise rates, which makes a miss like this costly. Governor Christopher Waller said this morning, before the data, that he leans towards a 25 basis point hike in December. He added that a hot October would put 50 on the table, warning that hiking only 25 could put the Fed's credibility at risk.
The bond market is pricing exactly that. The 5-year yield is up 10.9bp to 4.768% and the 13-week bill 7.2bp, while the 30-year has added only 3.7bp. When short-dated yields rise fastest, the market expects tighter policy soon. Higher discount rates reduce the present value of distant earnings most, which is why Nasdaq futures are falling about twice as fast as the S&P's.
That undoes much of Monday's rally. Chip stocks rebounded after a post-midterm sell-off driven by fears of slower AI data-centre spending, with AMD up about 13% on an upgrade. That happened even though Nvidia fell around 4% after its board opened an investigation into chief executive Jensen Huang. Oil is the offset. Brent has fallen below $90, at $89.52 (down 3.29%), after President Trump said he would hold off on new strikes against Iran. That explains why Europe and Asia's oil-importing markets are higher. AI supply is also back in focus: Anthropic has started its IPO roadshow, offering 825 million shares at $70–78 each.
Sentiment & risk appetite
Monday's rally was broad: our US breadth count showed 4,693 advancers against 1,442 decliners. Industrials led with a 3.82% gain and technology added 3.73%, while energy lagged at 0.52%. That confidence is now being tested. The VIX has risen 1.07 points to 20.99. Safe havens are not being bought either: gold is down 1.21% at $4,064.70 and the dollar index is up 0.35% at 102.00. This is a rates scare rather than a flight to safety.
Economic calendar
October CPI printed at 08:30 ET today. Headline prices rose 0.4% month on month and core 0.3%, both a tenth above forecasts. Energy prices rose 0.7%, down from 5.2% in September. Shelter rose 0.3% and accounted for more than 30% of the monthly increase. No annual rate was published, because the 2025 government shutdown left no October 2025 data to compare against. This is the last CPI report before the Fed's 8–9 December meeting. Futures already give a 25bp hike there odds of more than 80%.
Still to come today (ET): Dallas Fed President Lorie Logan speaks at 09:35, the EIA's short-term energy outlook is out at 12:00, and the 10-year note auction is at 13:00. Kansas City Fed President Jeff Schmid speaks at 13:30, Governor Michelle Bowman at 15:30 and again at 18:30, and API crude inventories are due at 16:30.
Earnings
Three companies reported before the US open. TransDigm's adjusted EPS of $12.44 beat the $11.43 consensus. Venture Global earned $0.96 a share, well above estimates, and raised its 2026 adjusted EBITDA guidance to $10.0–10.3bn from $8.7–9.1bn. Sea's revenue of $8.58bn beat the $8.11bn forecast, but adjusted EBITDA missed, and its shares fell 8.2% after the report.