Morning Brew October 15 2026

Good morning.

Just now, TSMC beat expectations with profit up 69% to 763 Taiwan Dollars versus an expectation of 746

Hotter U.S. inflation was the key event yesterday  The CPI came in above already elevated expectations, sending yields and the U.S. dollar sharply higher while U.S. equities and precious metals fell.

Overnight, markets staged an interesting reversal. The U.S. 10-year yield started yesterday near 5.20%, rose to 5.30% and has since fallen to around 5.10%. The USD Index tested 103 before retreating to 102. The reversal appears to be driven by safe-haven demand, with investors unsettled by the AI trade moving into government bonds.

Charu is bringing some light to the dark: Investor Q&A: AI selloff, hot CPI and what can investors do?

• Good news is no longer enough. Strong AI demand remains intact, but valuations, financing costs and returns on investment are becoming more important.
• AI credit risks are in focus. CoreWeave's bond selloff highlights concerns about debt-funded infrastructure expansion, although not all AI companies face the same risks.
• Markets are caught between inflation and growth fears. December Fed tightening remains in market expectations, but slowing growth is becoming an increasingly important consideration.
• Earnings and portfolio balance matter. Investors may want to focus on cash flows, capital discipline and diversification rather than abandoning structural growth opportunities.

Credit stress in the AI trade is building. The cost of insuring against U.S. technology defaults has reached record levels, particularly for data centres dependent on future revenue. Five-year credit-default-swap spreads widened by 26 basis points to a record 288 for Oracle and by 24 basis points to 424 for SoftBank, while CoreWeave spreads moved above 1,000 basis points.

Beyond the CPI fallout, the main themes remain the Middle East and its impact on global growth, the health of the AI trade and widening credit spreads.

U.S. inflation accelerated in September. Headline CPI rose to 3.7% year-on-year from 3.4%, above the 3.6% forecast, mainly because of surging energy costs. Gasoline increased 34.2% and fuel oil 74.2%, while shelter inflation rose to 3.2% and food inflation eased to 2.5%. Monthly CPI gained 0.6%, led by a 9.1% jump in gasoline. Core inflation increased to 2.6%, while monthly core CPI remained at 0.3%.

U.S. equities suffered their worst session since late July. The S&P 500 fell 1.1% to 7,719, ending its longest run without a 1% decline in more than six years. The Nasdaq Composite dropped 1.9% to 26,693, while the Dow slipped 0.1% to 51,621. The semiconductor index sank 4.5%, with CoreWeave falling more than 15% on concerns over its AI debt load. The Russell 2000 entered correction territory, falling nearly 2% and more than 10% below its August peak. Bank of America lost 4.8% after weaker-than-expected trading revenue and a USD 1 billion regulatory fine, while Morgan Stanley fell 2.8% despite record IPO activity in its wealth business. Anthropic reported third-quarter revenue of USD 17 billion, an adjusted operating margin of 11% and positive free cash flow as it targets an IPO by year-end. South Korea’s SK Hynix is seeking U.S. approval to export chipmaking equipment to China as a condition for building a factory in the United States.

Apple became the second company to close above a USD 5 trillion market value, ending Wednesday at just over USD 5 trillion.

European equities bucked the global selloff. The Stoxx Europe 600 rose 0.4% to 638, its highest close since 29 September, while the Euro Stoxx 50 gained 0.4% to 6,190. The DAX added 0.2% to 25,299, led by Rheinmetall, and the FTSE 100 rose 0.7% to 10,725, supported by AstraZeneca and Barratt Redrow. The SMI climbed 1.5%, its strongest daily gain since July, driven by Roche and Lonza. Investors rotated into defensive healthcare and food-and-beverage shares after the hot U.S. CPI print. ASML raised its full-year sales outlook, although the initial positive reaction faded as rate-hike concerns dominated sentiment. UBS is reportedly considering a move out of Switzerland, according to the Wall Street Journal, despite comments from Sergio Ermotti last week that appeared to indicate otherwise.

Rates, the dollar and precious metals reacted sharply. The USD Index rose as much as 0.6% after the CPI release. Gold fell as much as 2.1% and silver dropped 6.1%, its largest one-day decline since June, before both recovered modestly this morning to around USD 4,142 and USD 56. The U.S. 2-year yield reached 4.95%, the 10-year 5.30% and the 30-year 5.63%. Buyers later stepped in, and yields have continued to ease this morning, with the 2-year near 4.77%, the 10-year at 5.1% 
 
Asia  is selling off, with the technology supply chain bearing the brunt of the damage. The U.S. 500 is near 7,594, Germany 40 around 25,212 and Japan 225 down 5% to 64,800. The MSCI Asia-Pacific Index excluding Japan fell 3.3%, led by an 8% plunge in South Korea’s KOSPI,

The IMF expects Asian growth to moderate next year and warned that the energy shock from the Iran war, a potential correction in the AI boom and spillovers from rising global bond yields are increasing the risks.

Anthropic’s third-quarter revenue rose 45% to USD 17 billion, according to people familiar with the matter. The company hosted public-market investors at its San Francisco office on Wednesday ahead of its planned IPO next month.