Markets Reassess Inflation and AI Debt as October Fed Pause Bets Rise

Above-forecast U.S. inflation readings and scrutiny of borrowing by AI infrastructure firms shifted this week's market focus toward financing risk, while renewed Fed pause expectations shaped rate bets. September's consumer price index (CPI) and producer price index (PPI) both came in above forecasts, initially strengthening expectations for another rate increase. After Fed officials took a cautious tone, an October pause again became the market's baseline expectation. The chance of another increase before year-end has not disappeared. That left inflation and the path of borrowing costs central to the market outlook. AI infrastructure companies faced a parallel test over financing. CoreWeave and other highly leveraged operators came under selling pressure as investors scrutinized debt exposure and expansion models.

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