Warsh holds cards close on Fed policy, but inflation numbers may tip his

Hello, this is Hui Jie writing from Singapore, filling in for Leonie Kidd. Welcome to another edition of CNBC’s Daily Open.

Federal Reserve Chairman Kevin Warsh offered markets few clues in his final public appearance before the central bank’s October meeting. The latest inflation data, however, may have spoken for him.

Meanwhile, the AI trade had a rough Thursday as investors shifted their attention from what the technology can do to who will pay for it.

CoreWeave, whose debt is showing signs of distress, has become the sector’s latest cautionary tale.

In his last public appearance before the Federal Reserve’s October meeting, chairman Kevin Warsh gave no signals about where the central bank could go, saying he does not “prejudge meetings.”

“I don’t believe in saying now what I might do at the meetings that we have in the balance of this year,” Warsh said.

Speaking to the International Monetary Fund’s managing director, Kristalina Georgieva, in Bangkok on Friday, Warsh said he observed a “synchronous tightening in monetary policy in most places around the world,” which meant there were no “free riders” in the global fight against price increases.

But economic data may provide a clue. U.S. producer prices rose 6.3% in September from a year earlier, hotter than the 5.5% forecast.

Earlier this week, consumer inflation also ran above expectations for September, rising to 3.7% from a year earlier, compared with a 3.6% forecast

The company is facing mounting credit stress, with the yield to maturity on its 9.75% bond due in 2031 reaching 15.78%. Yields generally rise when investors view a bond as riskier.

Meanwhile, the spread on its five-year credit default swaps, contracts used to hedge against default, at one point soared above 1,140 basis points.

A spread level of 1,000 basis points or above is generally a sign of credit distress, said Gavan Nolan, executive director of fixed income pricing at S&P Global Market Intelligence.

Investors rotated out of parts of the AI trade amid mounting funding concerns, with Nvidia losing 1.84%, while AMD sank 1.5% and Intel lost about 2.8%. Dell Technologies sank 6.8%.

Collectively, 20 of the most valuable global AI and semiconductor stocks have shed more than $1 trillion in value so far this week, with higher interest rates, concerns about AI financing and intensifying competition weighing on sentiment.

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