JPM US Market Intelligence | Afternoon Briefing Oct 14
- CPI Surprise & Inflation Pressure: Core CPI at 0.335% MoM (7bp above estimates), largest upside surprise since March 2024, driving hawkish Fed pricing (50% Oct hike probability) and spiking 2Y yields 16bp; core PCE forecast at 0.31% m/m (3.1% yoy) signals persistent inflation.
- AI Credit Fears & Tech Selloff: AI-driven sector rotation triggered by credit distress (CoreWeave -15.5%, ASML memory underperformance), with Semis (SOXX down 6 days) and banks (BAC -5.5%) leading declines; AI credit event concerns fueling spread widening.
- ETF Flow Shifts & Sector Rotation: Capital flowing into energy/growth ETFs (MLPX, IEO, IVF) and global EM ETFs (ACWI, VT, VXUS) amid CPI-driven volatility, while defensives (healthcare/staples) outperformed cyclical tech by 7.0%.
- Fed Rate Probability Volatility: Post-CPI, Oct hike probability surged to 50% (from 20%), then reversed to ~32%; bond yields showed confusion (2Y +2bp, 10Y -2bp), reflecting Fed signal uncertainty and overreaction to inflation data.