Prices Ran Hot. Yields and the Dollar Fell, and Hike Bets Gave Most of It Back.

September consumer prices rose 3.7% from a year earlier, above the 3.6% forecast. The 10-year Treasury yield still finished Wednesday lower, at 5.19% from 5.21%.

The easing carried overnight. The dollar weakened, gold rose and Brent slipped.

Stocks didn't share the relief. Nasdaq-100 futures fell more than S&P 500 futures, and Dow futures rose.

Market Implication

So far the pressure looks concentrated in AI stocks and their lenders rather than in rates. Producer prices at 8:30 a.m. test whether inflation can take the lead back.

The October Hike Bet Gave Back 86% in a Day

Kalshi's October hike contract went from 18 cents before the CPI report to 55 cents at 9:06 a.m. Wednesday. By about 6 a.m. Thursday it traded at 23 to 24 cents.

Core prices had just risen 0.3% for a second month, above the 0.2% forecast. The bet unwound anyway.

Most of the retreat came in daylight. The contract was down to 35 cents by 1:46 p.m., before the Fed's 2 p.m. Beige Book. The rest came in the evening and overnight, including a burst of about 45,500 "no" contracts that no news has been tied to.

The Beige Book gave both camps something. Higher oil prices showed up in every district's report. Consumer spending was flat in most districts.

Structural Setup

Kalshi at 23 to 24 cents and Polymarket at 24.5 both sit about a third above Kalshi’s 18-cent pre-report level, not back at it. Futures closed Wednesday near 37%. Whether they followed the event venues down overnight decides whether this was a repricing or a thin book. Core producer prices are forecast to rise 0.3%.

Seoul Sold First. Then TSMC Beat Its Own Forecast.

South Korea's Kospi fell 7.6% and tripped its first circuit breaker since late July. SK Hynix lost about 11% and Samsung Electronics more than 9%. Japan's Nikkei fell about 5%.

Then TSMC reported. Third-quarter revenue was $46.72 billion, above the top of its own $44.6 billion to $45.8 billion range. It guided the fourth quarter to $52.3 billion to $54.3 billion.

But gross margin slipped to 66.4% from 67.7% as the 2-nanometer ramp began. TSMC is being "prudent" about 2027, Chief Executive C.C. Wei said on the earnings call.

The ADRs were down about 1.9%, near $422, at 6:10 a.m.

Bitcoin sat near $81,100 before 5 a.m., and ether was down about 5%. U.S. bitcoin funds had $261.4 million of net outflows on Wednesday and ether funds $129.5 million, Farside data show.

Sector Read

TSMC still calls AI demand "extremely robust," and the stock fell with its peers. Saxo's Charu Chanana called the Asian selloff a repricing of the cost of capital and said investors aren't questioning whether AI demand exists. The tape looks more focused on funding than on orders, though broad derisking after a long run fits too.

Two Ships Sank. The Blockade Bet Fell. So Did Brent.

Singapore's maritime authority said the container ship GFS Pride sank after what it described as a projectile strike. Iran's Revolutionary Guards say the ship hit a mine. Washington has not officially attributed the attack.

The Cape Dao, a bulk carrier hit in late September, also went down, International Maritime Organization data show.

Polymarket's contract on a U.S. announcement ending the Iran blockade by Oct. 31 held at 12.5 cents through Wednesday's session. It then stepped down overnight to 7.5 cents.

Brent fell over the same hours, with no single cause. A U.S. official told Reuters that Washington is weighing easier sanctions on some shadow-fleet tankers. On Wednesday, the International Energy Agency put September supply up 2.5 million barrels a day and warned the recovery could still be disrupted.

The energy ceasefire President Trump announced Sunday, which neither side has confirmed, also looks shakier. A Ukrainian drone attack set fire to Russia's Ryazan refinery, the regional governor said, according to Reuters.

Watch Signal

Traders cut the odds of a U.S. announcement ending the blockade, and crude fell anyway. The two price different questions. The gap matters if attacks keep sinking ships while Gulf exports keep rising.

Private Money Paid Up for an AI Renter. Credit Charged the Builders.

Insurance on Oracle's debt hit a record overnight. Its five-year credit default swaps widened 26 basis points to 288, Reuters reported, citing S&P Global Market Intelligence. CoreWeave's topped 1,000, per LSEG, and its 2032 bonds traded at 77 cents.

On Wednesday, AI cloud startup Modal said it raised $750 million at a $15.75 billion valuation, led by Accel. That is more than triple its $4.65 billion value in May. Modal says it has passed a $1 billion annualized revenue run rate.

The difference is the balance sheet. Modal sells computing time by the second, running on other companies' clouds. CoreWeave builds and leases data centers and has borrowed heavily to fund them.

This week, equity paid more for a company that rents computing, while credit charged more to companies that borrow to build.

The Read

If Modal's growth is any guide, the builders' problem may be funding and duration more than demand. The next AI-infrastructure bond or loan to price is a cleaner signal than the next earnings beat.

Economic Data: Producer prices, retail sales, jobless claims and the Philadelphia Fed survey, 8:30 a.m.

Fed Speakers: Cleveland's Beth Hammack, 4:30 p.m. Chair Kevin Warsh in a fireside chat with the IMF's Kristalina Georgieva, 11:30 p.m. tonight.

Earnings: Charles Schwab (SCHW), before the open. BNY (BK) reported earnings of $2.34 a share. PNC (PNC) earned $5.09 a share adjusted, above the $4.91 Benzinga consensus.

Overnight: Nikkei -4.90% | Shanghai -1.59% | FTSE +0.77% | DAX -0.40%

A hot print usually lifts rate bets.

This one left the 10-year yield and the dollar lower, and the hike bet only about 6 cents above where it started. Meanwhile, the price of insuring AI's biggest borrowers hit records.

Producer prices at 8:30 a.m. are the cleanest test. A hot print that sends the hike contract back toward the mid-30s puts both scares in play. A soft print with chips still falling points to the price of AI money, not the Fed, as the market's problem.