Chip Rout Sinks Kospi 8.5% as Treasuries Rally and the Dollar Slides
Thursday, 15 October 2026 — The selloff in chip stocks deepened in Asia after yesterday's hotter-than-expected US inflation data lifted bets on further Fed rate hikes and CoreWeave's bonds fell to distressed levels.
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In brief
The selloff in chip stocks deepened in Asia after hotter US inflation and CoreWeave's bond slump, and Korea's Kospi plunged towards a bear market after a brief trading halt.
Treasuries rallied on haven demand and the dollar weakened, while gold and the Swiss franc gained.
The Fed's Daly and Bowman see no urgency for an October hike, Goolsbee called the inflation data discouraging, and the Beige Book flagged spreading energy costs.
The ECB's Dolenc said tighter markets may mean less work for the bank, Knot backed a mildly hawkish posture, and the BoE's Pill questioned bets on four UK rate hikes.
Australia unexpectedly lost jobs in September and unemployment stayed high, so traders scaled back bets on another RBA hike.
Oil fell, while a Houthi leader called Saudi Aramco a strategic target and US officials described new strike plans against Iran.
Today's Macro Roadmap: UK GDP at 08:00 CET, the BoE's Greene and Breeden, TSMC results, PNC, U.S. Bancorp and Charles Schwab before the US open, US retail sales and producer prices at 14:30 CET, and Fed Chair Warsh in Bangkok tomorrow.
The full briefing
The selloff in chip stocks deepened in Asia after yesterday's hotter-than-expected US inflation data lifted bets on further Fed rate hikes and CoreWeave's bonds fell to distressed levels, adding to doubts about the financing of artificial intelligence (BBG). The Kospi fell 8.5% to 5,500. An earlier slide triggered a 20-minute trading halt, the index is on track to enter a bear market, and SK Hynix and Samsung Electronics fell more than 9% each (BBG). Nikkei 225 futures fell 5.0% to 64,750, S&P 500 futures 0.4% to 7,738, and Nasdaq 100 futures 1.0% to 29,883. Treasuries rallied on haven demand and the dollar weakened (BBG).
Stocks
In stocks, MSCI's Asia Pacific index fell 2.8% and was heading for its lowest close since July (BBG). A gauge of US chip stocks has erased 1.6 trillion dollars of market value in a six-day losing streak, and strong results from Samsung and ASML have failed to calm investors (BBG). Foreign investors sold 1.8 billion dollars of Korean stocks this morning, taking October's outflows past 10 billion dollars, and SK Hynix is now 57% below its summer peak (BBG). Taiwan's stocks fell more than 3%, their sharpest drop since July (BBG). Hong Kong's Hang Seng fell 1.5% to 23,960 and the CSI 300 1.9% to 4,136. India's Nifty 50 rose 1.4% to 22,933. Yesterday the Russell 2000 entered a correction, and the US semiconductor gauge had its longest losing streak since May 2025 (BBG). Euro Stoxx 50 futures fell 0.9% to 6,159 and DAX futures 0.5% to 25,331. VIX futures rose 0.27 points to 18.35.
The Fed
Regarding the Fed, yesterday's data showed US consumer prices rose 3.7% y/y in September, above the 3.6% consensus, with gasoline accounting for more than half of the headline increase, and core prices rose 0.3% m/m against the 0.2% forecast (LS). San Francisco Fed President Mary Daly told Reuters that further rate hikes are more likely than not to be needed but that she feels no urgency to move at the 27-28 October meeting (Reuters). Fed Vice Chair for Supervision Michelle Bowman said the Fed has time to wait and see how markets and the economy evolve after September's rate rise, adding that she feels no urgency for further action (Reuters). Chicago Fed President Austan Goolsbee called the data "discouraging" and said services inflation is running above 5% (Yahoo Finance). He also warned that the build-out of AI data centres may be overheating the economy (BBG). The Fed's Beige Book said half of its 12 districts saw robust or intensifying price pressures as higher energy costs spread through local economies, with firms passing on diesel costs through fuel surcharges (BBG). In the Beige Book's national summary, five districts said some firms had reduced staff, delayed hiring or expected to create fewer jobs after productivity gains from investing in AI (Federal Reserve). Traders raced to bet on higher Fed rates before the end of the year after the data, with some wagering on a half-point increase in December (CNBC). Jason Schenker of Prestige Economics, who was early to call last month's hike, said the Fed may raise rates by half a point in December if a quarter-point move fails to curb inflation (BBG).
Europe
In Europe, ECB Governing Council member Primoz Dolenc said a tightening in financial conditions may mean the ECB does not have to do as much as it otherwise would, adding that policy is "approaching the restrictive area" (BBG). Lithuania's Gediminas Simkus said more tightening may be needed and that action this month cannot be excluded, although a December decision would rest on more data (BBG). Former Dutch central bank governor Klaas Knot, seen as a frontrunner to succeed President Christine Lagarde, said the ECB will probably need a policy posture that is "mildly on the hawkish side" because it will approach its 2% target more often from above (BBG). Portugal's Álvaro Santos Pereira said inflation is not spreading and that the rise in yields is more related to fiscal issues (LS). In the UK, Bank of England chief economist Huw Pill said he is sceptical that the Bank will need to follow market pricing to four quarter-point hikes (BBG). Governor Andrew Bailey said it is becoming harder to avoid a rate rise the longer the energy shock lasts (BBG). Pill also said early wage data suggest inflation is running above target (LS).
Asia & New Zealand
In Japan, Bank of Japan board member Junko Koeda said the Bank should not become overly cautious about raising rates given considerable upside risks to prices, and she put the neutral rate considerably above 1%, against a policy rate of 1.25% (BBG). In New Zealand, Reserve Bank chief economist Paul Conway said the decision on 28 October is "wide open" between a hold and a quarter-point hike, with the cash rate still most likely to rise, and he sees upside risk to the fourth-quarter inflation forecast from oil prices and the weaker New Zealand dollar (BBG).
Currencies
In currencies, the dollar index fell 0.4% to 102.11. Bloomberg's dollar gauge had reached its highest level since May 2025 yesterday (BBG), and hedge funds unwound long-dollar positions against currencies including the euro (BBG). The euro rose 0.5% to 1.1211 dollars and sterling 0.3% to 1.3239 dollars. The Swiss franc rose 0.6% to 0.8301 per dollar. The yen rose 0.2% to 157.99 per dollar. It had touched 158.95 after the US data, and Finance Minister Satsuki Katayama said Japan will act without hesitation if necessary, with no change in the US-Japan stance since their joint intervention in July (BBG). The Australian dollar fell 0.3% to 0.6953, and the New Zealand dollar rose 0.3% to 0.5612. The Taiwan dollar fell as much as 0.8% as the chip selloff hit tech-sensitive currencies (BBG). South Korea's won weakened 0.6% to 1,348.88 per dollar. The Philippine peso weakened past 63 per dollar for the first time, Bank Indonesia intervened to steady the rupiah, and the Reserve Bank of India sold dollars (BBG). India's rupee rose 0.2% to 94.97 per dollar, and the offshore yuan was little changed at 6.6933.
Bonds
In bonds, Treasuries led a global rally as the equity selloff drove demand for havens (BBG). The ten-year yield fell 8.4 basis points to 5.11%, the five-year 8.4 basis points to 4.91%, and the thirty-year 6.9 basis points to 5.46%. A gauge of Treasury returns has gained almost 0.7% this month after a 2.2% slump in September and is on course for its best October since 2014 if the gains hold (BBG). Japan's ten-year yield fell 7.2 basis points to 2.92%. Australia's ten-year yield fell 9.4 basis points to 5.23% after the jobs data (BBG). Bund futures rose 0.7% to 121.75 and OAT futures 0.7% to 109.5. Talk is growing in the market that China is routing holdings of US Treasuries through Canada (LS).
Commodities
In commodities, Brent fell 1.4% to 106.7 dollars a barrel and WTI 0.8% to 94.33 dollars. A senior Houthi official told the Asahi Shimbun that the group regards Saudi Aramco as a "strategic target" and will continue its attacks, and that it could extend its naval blockade in the Bab al-Mandeb Strait if the US intervenes (Asahi Shimbun). Gold rose 0.8% to 4,139 dollars an ounce. It recovered after three days of declines (BBG). Silver rose 0.2% to 55.73 dollars, and copper fell 1.5% to 6.56 dollars a pound. Iron ore futures in Singapore traded below 90 dollars a ton for the first time since 2024, with China's crude steel output in the first eight months of the year the lowest for the period since 2018 (BBG). Natural gas rose 2.0% to 3.262 dollars. Bitcoin fell 0.8% to 80,917 dollars, and Ether fell 2.6% to 2,355 dollars.
Geopolitics
In geopolitics, the US military has drawn up new strike plans that include the possible use of the GBU-43/B, the largest non-nuclear bomb in the US arsenal, against Iranian energy infrastructure and nuclear sites should President Donald Trump order combat operations to resume before or after the midterm elections, according to US officials (CNN). House Democrats are preparing a 100-day agenda if they win a majority in next month's elections, including votes against the Iran war, the reinstatement of Affordable Care Act tax credits and the reversal of Trump's tariffs (AP).
Corporate news
In corporate news, Bank of America's bond-trading revenue fell 17% to 2.55 billion dollars, and its results included a 1.2 billion dollar charge for money-laundering and sanctions fines (BBG). Its shares fell as much as 8.7% yesterday, the biggest intraday drop since April 2025 (BBG). CoreWeave's unsecured bonds due 2032 fell below 80 cents on the dollar, a level that typically signals distress, and its shares fell as much as 17% yesterday, with chief executive Mike Intrator telling staff the market is acting "irrationally" (BBG). Anthropic told prospective investors its third-quarter revenue reached 16.8 billion dollars, a figure some analysts saw as below expectations (BBG). Smartphone shipments fell 22% in the September quarter, the worst decline on record, as rising memory costs forced price increases, and IDC expects no recovery before 2028 (BBG).
What I am reading
In other news, this article caught my eye: The AI math isn't mathing as infrastructure spending forecast to outstrip expected revenue (The Register). Gartner estimates that AI providers will spend nearly 1 trillion dollars on AI infrastructure in 2026 and another 6 trillion dollars from 2027 to 2030, while the AI revenue attributable to their data centres will add up to no more than 3.6 trillion dollars (The Register).
Data and the day ahead
Data and the day ahead: Australia's employment fell by 39.3k in September, against a forecast gain of 20.0k, after a revised rise of 29.3k in August, and the unemployment rate held at 4.7%, above the 4.6% consensus, after August was revised up to 4.7% (BBG). Part-time jobs fell by 73,700 and full-time jobs rose by 34,400, and the participation rate fell to 66.8% from 67.0% (BBG). The Australian dollar fell and traders scaled back bets on another rate rise by the Reserve Bank of Australia after the data (BBG).
Japan's core machinery orders rose 5.2% m/m in August, above the 2.3% consensus, from -3.7% in July, and 18.6% y/y against 15.6% expected. Industrial production for August was revised down to -2.4% m/m from the preliminary -1.7%. Still to come: UK monthly GDP for August at 08:00 CET, where consensus looks for -0.1% m/m from 0.4%, with industrial production at -0.1% m/m from 0.2%. Bank of England policymaker Megan Greene speaks at 08:45 CET and Deputy Governor Sarah Breeden at 10:45 CET. Euro-area industrial production is due at 11:00 CET, with consensus at 0.0% m/m from -0.1%, and Bank of Canada Senior Deputy Governor Carolyn Rogers speaks at 11:00 CET. TSMC reports its third-quarter results today (BBG), and PNC, U.S. Bancorp and Charles Schwab report before the US open. US retail sales at 14:30 CET are the main event, where consensus looks for 0.3% m/m from 1.1%, and 0.6% m/m excluding autos from 1.3%. Producer prices are due at the same time, with consensus at 0.6% m/m from 0.4% and 5.4% y/y from 5.4%, and the core at 0.3% m/m from 0.2% and 4.4% y/y from 4.6%. Initial jobless claims are expected at 200k from 197k, the Empire State index at 12.3 from 7.6, and the Philadelphia Fed index at 28 from 37.8. US crude inventories follow at 18:00 CET, and Cleveland Fed President Beth Hammack speaks at 22:30 CET. Fed Chair Kevin Warsh appears at a fireside chat in Bangkok tomorrow (BBG).
Time Stamp: 15 October 2026, 07:32 CET
Editor's Note
Three threads to carry through the day.
The first is the AI trade. Hotter US inflation raised the cost of money just as CoreWeave's bonds signalled strain in the financing of the AI build-out, and Korea, the market most exposed to memory chips, took the hardest hit. TSMC's results today are the next test of whether demand still justifies the spending.
The second is the Fed. Daly, Bowman and Goolsbee all see more tightening ahead but no urgency, and the Beige Book shows energy costs spreading through supply chains. Today's retail sales and producer prices decide whether December stays the base case or October comes back into play.
The third is the haven bid. Treasuries, gold and the Swiss franc gained while the dollar fell, which looks more like long-dollar positions being unwound than a simple flight to the dollar. Katayama's warning keeps a floor under the yen.
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Tags: Kospi chip stock selloff, AI stocks selloff, CoreWeave bonds, Federal Reserve rate hike, Fed Beige Book, Australia jobs September 2026, Treasury yields, US retail sales