AI Rally Fades in North America as Inflation Pressures Rates

Upward momentum from Monday’s AI-driven rally continued through overseas markets overnight but has cooled in North America so far this morning.

A big test of supply and demand appears to be on the way, with Anthropic announcing plans to complete its IPO next week and potentially start trading on Thursday, November 19. The indicative pricing range has been set at $70-78 per share, valuing the company at up to approximately $1.4 trillion, about halfway between the $965 billion valuation of its last private financing round in May and the $2.0 trillion that had been widely speculated in recent weeks.

US consumer prices were worse than expected, rising 0.4% over the month versus the Street estimate of 0.3%, but improving from the previous 0.6%. Year-over-year data is unavailable due to last year’s government shutdown. Stocks have been falling and

Treasury yields have been rising as this keeps pressure on the Fed to raise interest rates this month. Meanwhile, energy and metals prices continue to fall, with the continued blockade of Iran and negotiations taking precedence over more attacks.

NASDAQ futures are down 1.4%, while Dow futures are down 0.2%. In Asia, the Nikkei rose 2.9% and the Hang Seng gained 0.4%. In Europe, the DAX is up 1.1% and the FTSE is up 0.4%.

Crude Oil is down 3.0%, falling below $85.00/bbl, while Brent Crude is down 3.5%, falling below $90.00/bbl. Gasoline is down 2.7%, falling below $2.60/gallon. Gold is down 1.2%, falling below $4,100/oz, Copper is down 1.2%, falling toward $6.25/lb, and Silver is down 1.4%.

The US 10-year Treasury note yield is climbing toward 4.95%, while the US 30-year Treasury note yield is rising above 5.30%. The US Dollar Index is up 0.3%, while the Euro is down 0.3% and the Loonie is down 0.4%.

Looking ahead, the focus on inflation this week continues with US producer prices on Friday. Earnings season shifts this week to a large number of US small- and mid-cap companies, as well as Canadian and international companies reporting.

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