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MORNING BID AMERICAS-Jumbo Fed hike hits radar

By Reuters News

By Mike Dolan

Nov 11 (Reuters) - With stock markets in thrall to the fascinating tech sagas at Nvidia and Anthropic, a new twist in the Federal Reserve tale dominated wider markets on Tuesday.

Before we saw the details of another hot US consumer price inflation report, Fed Governor Christopher Waller said a jumbo 50-basis-point interest rate hike should be considered next month if core monthly inflation came in again at 0.3% or above.

And that's exactly what we saw later in the day.

With Dallas Fed chief Lorie Logan giving a similarly hawkish message later on Tuesday, markets started pricing the outside chance of a half-point hike in December - or, if not that, then two successive rises next month and January.

With inflation readings sticky across several sectors beyond fuel and transportation and headline annual rates almost twice the Fed's target, bond markets were spooked, with 2-year Treasury yields surging by up to 20 bps, and stocks tumbled despite the tech-sector focus.

A backup in oil prices early today on more shipping attacks and disruption in the Gulf didn't help.

Nvidia's woes mounted amid widening reports and probes into boss Jensen Huang's relationship with a Chinese businesswoman alleged to be a spy for Beijing, and the firm has now lost almost 10% or about $430 billion in market cap this week - with pressure building on Huang to stand down.

Nvidia has said its board has no reason to believe US national security or company secrets were compromised and that Huang has committed to cooperating with the internal review.

There was slightly better news in the AI world as Anthropic got its IPO roadshow underway, indicating it would sell almost $90 billion in new shares but at a slightly underwhelming valuation of $1.4 trillion - well shy of the $2 trillion hoopla talked about only a couple of months ago.

But back on the market itself, there was other calming news for the sector on Tuesday from data center builder CoreWeave's earnings beat and forecasts, which sent its battered stock up about 8% before Wednesday's bell.

CHART OF THE DAY

https://www.reuters.com/graphics/DEBT-TROUBLE/DEBT-TROUBLE/movarexgbpa/chart.png

The overall level of troubled borrowing in the US economy rose modestly in the third quarter but did not appear to signal a notable deterioration in credit quality, a report from the Federal Reserve Bank of New York said on Tuesday.

Loans that were in some form of trouble stood at 5% of the total during the third quarter, up three-tenths of a percentage point from the second quarter, the regional Fed bank said in its latest Quarterly Report on Household Debt and Credit.

TODAY'S EVENTS TO WATCH

  • Veterans Day: stock markets open, bond markets closed

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