Morning Money | Thursday, October 15

THE BIG STORY: HOT INFLATION HITS THE AI TRADE

U.S. inflation accelerated to 3.7% in September, above expectations, while core inflation rose 2.6%. That revived rate-hike concerns and triggered a sharp selloff in highly valued, heavily indebted AI companies.

Why Canadians should care: higher U.S. rates can keep North American bond yields and borrowing costs elevated, pressure the Canadian dollar if the Bank of Canada stays more cautious, and add volatility to Canadian technology holdings. Canada’s resource-heavy market may provide some cushion when metals and energy are strong.

OVERNIGHT & PREMARKET

• TSX futures edged up about 0.2% as precious metals rebounded and U.S. Treasury yields eased.
• Nasdaq futures fell roughly 1%, S&P 500 futures slipped 0.2%, and Dow futures gained about 0.3%.
• Asia took the brunt of the selloff: South Korea’s KOSPI plunged 7.6% and Japan’s Nikkei dropped 4.9%.
• Brent crude eased 1.1% to about US$104.91 a barrel, although Middle East and Russian supply risks remain.

COREWEAVE BECOMES THE STRESS TEST

CoreWeave shares fell another 6% premarket after dropping more than 15% Wednesday. Its 2031 bond yield moved above 16%, a level associated with serious credit stress. Investors are questioning whether debt-funded AI infrastructure can generate cash quickly enough to support the borrowing behind it. The concern has spread to other AI and semiconductor names.

BANK EARNINGS: MIXED SIGNALS

Wall Street’s largest banks reported slower dealmaking and weaker fixed-income trading after a strong first half. JPMorgan and Bank of America missed profit expectations, but consumer spending, borrowing and loan demand remained resilient.

CANADA LOOKS BEYOND THE U.S.

Canada is pushing to complete a trade agreement with India by year-end while deepening ties with Europe. Ottawa says an India deal could lift annual bilateral trade to C$70 billion by 2030 from C$30.4 billion in 2025—a potentially important diversification move as U.S. trade tensions continue.

WHAT TO WATCH

Today’s U.S. producer-price data, retail sales and jobless claims will show whether inflation pressure is broadening while the economy remains firm. Watch bond yields, the loonie and whether selling spreads from leveraged AI companies into the broader market.

Sources: Reuters, U.S. inflation (Oct. 14); Reuters, TSX futures (Oct. 15); Reuters, CoreWeave (Oct. 15); Reuters, bank earnings (Oct. 15); Reuters, Canada–India trade (Oct. 14).