Hot CPI: the Fed heads for a December hike, Brent drops below $90

Key takeaways

• October CPI tops expectations: +0.4% month over month (0.3% expected) and +0.3% excluding food and energy (0.2% expected), the threshold set this morning by Fed Governor Christopher Waller for considering 50 bp on December 9.
• What the market is pricing: according to CME FedWatch, a 25 bp hike in December was priced at 98.9% before the release, versus 1.1% for 50 bp; the surprise is about the size, not the principle. According to Saxo, options priced a move of about 0.8% in the S&P 500 for the session.
• Rotation out of tech: at 14:54 Paris time, ES is down 0.63% at 7,526.25, NQ is down 1.19% and YM 0.17%; the 2-year yield rises to 4.68% (+13.6 bp).
• Brent falls below $90 for the first time since August ($89.67 at 15:04, −3.13%), after Donald Trump called new strikes on Iran "unlikely."
• Nvidia (NVDA), about 7% of the index, is down 1.7% in premarket after −4.27% on Monday, under an investigation targeting its CEO Jensen Huang: about 9 S&P 500 points.
• $42 billion 10-year auction at 19:00, ahead of the bond market closure tomorrow for Veterans Day (stocks open).

Overnight and Europe

Prior session (Monday, November 9). The S&P 500 gained 2.35% to 7,549.94, its best session since April 8, in a range of 7,422.24 to 7,577.39, closing near the high. The rally was broad: the equal-weight RSP rose 2.27%, about 420 stocks advanced versus 80 decliners, and all 11 sectors finished higher, led by industrials (+3.82%) and technology (+3.73%), with energy bringing up the rear (+0.52%). AMD (AMD) rose 13.26% and Broadcom (AVGO) 8.78%, while Nvidia subtracted about 0.3 percentage point, roughly 20 index points. This was a second straight gain after four weeks of declines; the index remains 3.4% below its October 6 record of 7,818.93.

Last night and this morning. Take-Two (TTWO) and Occidental Petroleum (OXY) reported last night, TransDigm (TDG) this morning. TSMC, the foundry for Nvidia, AMD and Apple chips, reported October revenue up 59.7% year over year.

Asia (closes). The Nikkei rose 2.87% to 60,459.58, the Kospi 4.39% to 5,239.13 and the Taiex 2.5%, lifted by semiconductors. Hang Seng +0.44% at 24,557.04, Shanghai +0.08% at 3,663.72.

Europe. Around 15:00, the Euro Stoxx 50 is up 0.99% at 6,352.85, the DAX 1.07% at 26,545.38 and the CAC 40 1.10% at 8,323.90. In the morning, banks led (+2.6%) and oil stocks fell (−1.1%).

US futures. At 14:54, ES is at 7,526.25 (−48 points from the 7,574.25 settlement), after a low of 7,509; NQ 27,680.75 (−1.19%), YM 52,411 (−0.17%); the Russell 2000 was down 0.75% at 14:49. In premarket: Nvidia −1.7% at $175.68, TransDigm −4%, Take-Two +3% to +4%.

Today's calendar

CPI details. Energy rose 0.7% (after +5.2% in September), food 0.5% and shelter 0.3%, which accounts for more than 30% of the monthly increase. No year-over-year change is published, as no prices were collected in October 2025. Core has now printed 0.3% for a third straight month, an annualized pace close to 3.7%.

Rest of the week.

Fed and rates

Latest decision. On October 28, the FOMC chaired by Kevin Warsh held rates at 3.75%–4.00% by a 10–2 vote: Governor Lisa Cook and Cleveland Fed President Beth Hammack wanted an immediate hike. On September 16, the Fed raised rates by 25 bp unanimously. Next meeting December 8–9.

Officials. In London this morning, Waller backed at least 25 bp in December and said that in the event of a bad surprise, sticking to 25 bp "would put our credibility at risk." According to Goldman Sachs, the talk of 50 bp is worth only 3 to 4 bp of additional December pricing. On Monday, Chicago Fed President Austan Goolsbee likened the data center boom to "old-fashioned demand overheating"; San Francisco Fed President Mary Daly believes the Fed "will likely have to tighten further." Speaking today are Lorie Logan (16:50), Jeffrey Schmid (19:30), Michelle Bowman (21:30) and Anna Paulson (00:30); on Thursday, Beth Hammack, Michael Barr (governor), Austan Goolsbee, Mary Daly and John Williams, New York Fed president and FOMC vice chair; on Friday, Michelle Bowman and Mary Daly.

Probabilities. According to CME FedWatch, a 25 bp hike in December stood at 98.9% before CPI, versus 76.8% on November 6 after the jobs report (+165,000 jobs) and 66.9% on October 30. The variable to watch is the probability of 50 bp, at 1.1% before CPI.

Yields. Around 15:00, the 2-year is at 4.68% (+13.6 bp), the 10-year at 4.94% (+7.5 bp) and the 30-year at 5.31% (+5 bp). The 2s10s spread narrows to 25.5 bp from 31.6 bp yesterday: a bear flattening.

Rates and oil. Brent is down 3% and yields are rising anyway: the market is reading core, not energy.

Earnings

According to FactSet (November 6), 88% of S&P 500 companies have reported third-quarter results: 84% beat the EPS consensus estimate and 74% the revenue consensus estimate, for blended earnings growth of 31.4%. Thirteen index members report this week.

Reported

• TransDigm beat on the quarter and on FY2027 sales (+14%), but its FY2027 EPS ($47.52 at the midpoint) remains below the $48.66 expected, with an EBITDA margin trimmed to about 52.0% from 52.7%. The market is punishing the margin.
• Take-Two missed its own net bookings range ($1.62–1.67 billion), but CEO Strauss Zelnick described GTA VI pre-orders as "far in excess" of expectations, for a November 19 launch: the stock is trading the next quarter.
• Occidental beat by a wide margin on a realized oil price of $85.91 per barrel (+32.6% year over year); today's drop in Brent weighs more on energy than this quarter does.

Expected

Geopolitics and conflicts

US–Iran: the Strait of Hormuz

• Latest development. On Monday, after hosting Qatar's Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani, Donald Trump cited "positive momentum" toward ending the conflict and called new strikes "unlikely." The US naval blockade of Iran remains in place. A Qatari-Pakistani proposal would reopen Hormuz and lift the blockade; the US proposal includes the release of $6–9 billion in Iranian assets. Tehran denies any agreement on uranium enrichment.
• Indicator. According to Kpler, 7.82 million barrels per day transited Hormuz in the week ended November 8, 46% of the prewar level. Brent has lost 24% since its October 30 high of $118.
• Channel and tipping points. Energy, inflation expectations, rates. A reopening of Hormuz would push Brent below $89, benefiting rate-sensitive stocks at the expense of energy, as on Monday (Brent −5.85%, S&P 500 +2.35%); a resumption of strikes or tanker attacks would send it back above $93, with yields higher. Fereidun Fesharaki of FGE sees no quick deal, as the gap on nuclear material and control of the strait remains too wide.

US–China: Nvidia and export controls

• Latest development. Nvidia's board is investigating whether a person suspected of working for Chinese intelligence targeted Jensen Huang, who remains CEO; according to Donald Trump, the FBI is examining the matter. According to The Information, the administration could let new export controls go through (lithography tooling, remote access to advanced chips by Chinese companies) via the annual defense bill, which Hakeem Jeffries, the House Democratic leader, wants to use to limit chip sales to China. Jensen Huang has been called to a closed-door House briefing on November 18.
• Indicator. Nvidia lost more than $190 billion in market value on Monday.
• Channel. Each percentage point move in Nvidia is worth about 5 S&P 500 points. On Monday, flows shifted toward AMD and Broadcom; this rotation within the sector cushions the shock for the index as long as it lasts.

Oil and commodities

• Brent (January): $89.67 at 15:04, −3.13% from the $92.57 settlement (itself −5.85% on Monday), in a range of $89.18 to $93.12 since midnight. WTI (December): $84.67, −2.51%, settlement at $86.85.
• Drivers: de-escalation with Iran, recovering flows through Hormuz, discounts from Middle Eastern producers and Russia-Ukraine talks in Abu Dhabi, where an easing of sanctions on Russia could deepen the decline, according to IG.
• Gold: $4,065.50 an ounce (−1.19%).
• Impact on ES: the decline weighs directly on the energy sector, the index's laggard on Monday, and supports the rest of the market through inflation expectations. Below $89.18, it would revive the disinflation argument; above $93.12, it would add to CPI in pushing yields higher.

Dollar and volatility

• FX: around 15:00, the DXY is up 0.32% at 102.00, EUR/USD is down 0.30% at 1.1190 and USD/JPY is up 0.40% at 158.54, the day's high, on the rate differential widened by CPI.
• VIX: 21.19 at 14:55 (+1.27 points), after a high of 21.61. On Monday evening, the curve had returned to contango (3-month VIX / VIX at 1.05, according to Saxo); the SKEW, at 150.34, remains above its median (145.84).
• Implied moves (Saxo): about 0.8% for the session and 1.49% (about 113 points) through the Friday, November 13 expiration.
• Sentiment: targeted risk aversion. YM is down only 0.17% and Europe is holding at +1% while NQ is down 1.19%: it is the duration of growth stocks that is being sold. A VIX above 21.61, then 25.64 (November 6 close), would signal accelerating hedging; a return below 19.92 would confirm CPI has been digested.

What to watch in today's session

• 15:30, open: sell-side imbalance expected in Nvidia and semiconductors, Monday's drivers (SOX +6.85%). Reference levels: 7,549.94 (Monday's close) above, 7,509 (ES low this morning) then 7,422.24 (Monday's low) below. A stable Dow and a Russell 2000 contained at −0.75% would confirm the rotation; a Russell 2000 beyond −1% would signal a broader exit.
• 16:50, Lorie Logan: first voter to speak after CPI; a 2-year above 4.69% would reflect a shift toward 50 bp.
• 19:00, 10-year auction: thresholds at 4.955% and 4.90%; a poorly absorbed auction would show up first in NQ.
• 19:30 to 22:00: Schmid then Bowman, with reduced liquidity on the eve of a closed bond market.
• After 22:00: CoreWeave's report will be traded in the electronic session until 23:00, then at the midnight reopen; API at 22:30, Anna Paulson at 00:30.
• Intermarket: Brent below $89.18 without any easing in yields would confirm that the Fed dominates.

Morning tone: a too-hot CPI that locks in a December hike and reopens the 50 bp scenario, cushioned by Brent below $90 and a rotation out of tech rather than a general liquidation; a 10-year above 4.955% at the auction or a VIX beyond 21.61 would tip it toward broader selling, a 10-year back below 4.90% toward an ES rebound.