expectation

Cisco (CSCO.O) raised its revenue and adjusted EPS guidance for fiscal year 2027, and increased its revenue expectation from hyperscale cloud service providers for AI infrastructure in fiscal year 2027 to $9 billion.

Inflation data for October in the United States sends multiple warning signals. The data shows that the core CPI rose by 0.3% month-on-month, higher than the market expectation of 0.2%, exceeding expectations for the third consecutive month; the overall CPI rose by 0.4% month-on-month, also above expectations. The impact of rising energy prices is spreading to areas such as food and transportation, and service inflation remains robust, further complicating the Federal Reserve's efforts to control inflation.Specifically, food prices in the U.S. rose by 0.5% month-on-month in October, with grocery prices recording the largest monthly increase since April; urban transportation service prices saw the largest monthly increase since 2020, and prices for airline tickets and delivery services also increased. Additionally, service prices excluding energy and housing rents rose by 0.4% month-on-month, while owners' equivalent rent increased by 0.3%.AI investments are bringing new cost pressures. Over the past three months, the annualized price increase for computers and peripheral devices in the U.S. reached 25%, and electricity prices rose by 0.9% month-on-month in October, marking the largest increase in six months. Morgan Stanley estimates that AI-related factors have contributed about 6 basis points to the core CPI this year, with the current impact still relatively limited, but as data center investments expand, related pressures may rise further.In terms of monetary policy, Chicago Fed President Goolsbee described the latest inflation data as approaching an alarming level. Fed Governor Waller previously stated that if the core CPI month-on-month increase reaches 0.3% or higher, the December meeting should consider raising interest rates by 50 basis points. Goldman Sachs has included a forecast for an additional 25 basis point increase in March 2027, expecting that the target range for the federal funds rate will rise to 4.25% to 4.50%. However, some economists warn that there is a lag in the transmission of energy prices, and over-reliance on current data may lead to excessive tightening of monetary policy.

Reports suggest that the Bank of Japan's interest rate hike and the unwinding of yen carry trades may impact Bitcoin.

The U.S. October CPI exceeded expectations for the third consecutive time. Waller stated that a rate hike of 25 basis points in December is possible, and a 50 basis point hike cannot be ruled out. U.S. Treasury yields surged, with the ten-year approaching 5%. Saxo Bank pointed out that the market has fully priced in a rate hike in December, and the dollar has rebounded strongly.

Goldman Sachs stated on Tuesday that after the inflation data in October exceeded expectations, marking the third consecutive month of higher-than-expected inflation, the firm expects the Federal Reserve to raise interest rates by an additional 25 basis points in March 2027.

AI cloud service provider CoreWeave (CRWV.O) reported a 167% year-over-year revenue increase in the third quarter to $3.66 billion, exceeding market expectations of $3.55 billion, with a loss per share of $1.27, better than the expected loss of $1.46. The company raised its full-year revenue guidance from $12.4 billion to $13.2 billion to a range of $13 billion to $13.3 billion. According to MSX.COM data, after the earnings announcement, CoreWeave's stock price rose by as much as 8.7% in after-hours trading, following a cumulative decline of over 40% in the previous month and a year-to-date decline of 32%.As of the end of June, CoreWeave's debt exceeded $50 billion, with a bond yield of about 15.2% due in 2030. The company's CEO stated that investments are based on signed customer contracts, and customer prepayments also help support data center construction, with the existing order backlog sufficient to cover debt obligations. Microsoft previously stated that some emerging cloud service providers' data center projects have been delayed, tightening project oversight and exiting some high-risk projects. After the U.S. midterm elections, several newly elected officials indicated they would slow down or halt data center construction. CoreWeave stated that it plans to expand revenue by launching new services and expanding into the Asian market.

Federal Reserve Governor Bowman stated that long-term inflation expectations are well anchored.

Overall and core inflation rates in the U.S. for October exceeded expectations, which may keep the Federal Reserve on track for interest rate hikes next month. According to data released by the Bureau of Labor Statistics on Tuesday, the Consumer Price Index excluding food and energy rose by 0.3% from the previous month. Overall prices increased by 0.4%. Due to the interruption in data collection during the government shutdown last October, the Bureau of Labor Statistics did not release year-on-year changes.The report shows that price pressures continue to mount ahead of this month's midterm elections, with the Democratic Party focusing primarily on the cost of living to regain control of both houses of Congress. This year, the war in Iran, tariffs, and the boom in data centers have all fueled inflation. This is the last CPI report that Federal Reserve officials will see before the policy meeting on December 8-9. Investors expect that they will raise interest rates at this meeting to address inflation.Before the release, Federal Reserve Governor Waller stated that if core CPI rises by 0.3% or more, the Federal Reserve may need to raise rates by 50 basis points.

A Reuters survey shows that about 55% of the economists surveyed, or 56 out of 101, expect that the interest rate hike in December will mark the end of the current tightening cycle, a figure that is basically unchanged from last month.However, 45 economists still expect that the Federal Reserve will raise interest rates at least two more times, including more than half of the surveyed primary dealers, which is consistent with the expectations reflected in market pricing, and believe that the risks to the inflation outlook have not changed since the U.S. midterm elections. Changes in the political landscape are unlikely to quickly alleviate inflationary pressures.Despite market hopes that the nearly 9-month-long Middle East conflict could be resolved, leading to a drop of over 22% in crude oil futures prices from the late October peak, inflationary pressures still persist. A strong labor market, resilient economic growth, and inflation remaining above the Federal Reserve's 2% target for nearly six years all indicate that further tightening of monetary policy is still necessary.Wells Fargo Chief Economist Tom Porcelli stated, "The Federal Reserve's decision-making depends on the upcoming inflation data, which will prompt it to raise rates again. In fact, the Federal Reserve has every reason to raise rates at the October meeting."

Infineon has raised its sales forecast for data center business in 2027, expecting sales for the fiscal year ending in September to grow to approximately 4 billion euros.The previous forecast for AI data center power solutions revenue was 2.5 billion euros. CEO Hannebeck stated that revenue and profitability will significantly increase in fiscal year 2027, with power chips being one of the main growth drivers.

The October Consumer Expectations Survey by the New York Federal Reserve shows that U.S. consumers' inflation expectations for one year, three years, and five years remain at 3.9%, 3.3%, and 3%, respectively. The average expected probability of an increase in the unemployment rate over the next year has risen to 45.3%, the highest since April 2020. The expected growth in household income has decreased to 3%, and the expected growth in consumer spending has decreased to 5.3%.

According to a report by Caixin, the CEO of UBS stated that the significant correction in the U.S. stock market's AI sector over the past few weeks is a correction of the previously overly high expectations for the sector.He also acknowledged that the results of the U.S. midterm elections could slow down investments in artificial intelligence infrastructure, delaying the pace at which the AI industry realizes its value, and advised clients not to overly focus on short-term political issues when making asset allocations.

Affected by strong U.S. non-farm payroll data, the market expects the Federal Reserve to combat inflation through interest rate hikes. Gold prices softened in the early session, falling to around $4,060 per ounce.U.S. employment growth was strong in October, the unemployment rate slightly decreased, and the consumer confidence index rose to a three-month high. The market anticipates that the Federal Reserve will raise interest rates in December.

The initial value of the one-year inflation rate expectation in the United States for November is 4.3%, expected to be 4.7%, previous value 4.70%.

In October, the seasonally adjusted non-farm payroll employment in the United States was 165,000, expected to be 65,000, and the previous value was revised from 29,000 to 60,000.

In October, the average hourly wage in the United States increased by 0.4%, higher than the expected 0.3%, with the previous value revised from 0.1% to 0.3%.