Daily Briefing | 2026-10-15: Inflation and Shipping Risks Raise Capital Costs

Machine-translated with NiuTrans. Read the Chinese original.

Today's main theme

Over the past 24 hours, the market has once again faced the same constraint: whether it's AI capital spending, China's targeted credit easing, or Europe's efforts to address defense technology shortcomings, all must be promoted at higher capital and security costs. U.S. inflation exceeded expectations in September, and energy prices spread to core projects, further dampening speculation about interest rate cuts. The dollar and short-term bond yields rose, putting pressure on technology valuations first. Meanwhile, Nvidia is increasing its investment in AI security computing power in the UK, and new loans in China rebounded significantly in September, indicating that policy resources are still concentrated in the technology, project and corporate sectors. However, residents' demand for credit remains weak. Geopolitically, Ukraine has exposed its reliance on US satellite communications and early warning systems, while Iran has expanded its tactics of attacking ships around the Strait of Hormuz. Interest rates, technological competition, and critical infrastructure security are reinforcing each other, becoming a common theme in asset pricing today.

Five key news items

1. US inflation is rising again, and the market is re-pricing in interest rate hikes and "longer-term high interest rates".

The U.S. Bureau of Labor Statistics reported on October 14 that the consumer price index rose 0.6% month-over-month in September, up from 0.4% in August, and increased to 3.7% year-over-year from 3.4%. Gasoline prices rose 9.1% in a single month, contributing more than half of the overall monthly increase, while energy prices rose 20.4% year-on-year. More alarmingly, the core CPI, excluding food and energy, rose 0.3% month-on-month and 2.6% year-on-year, while housing, airfares, used cars, education, and healthcare projects also strengthened, indicating that the pressure does not only come from oil prices. Following the data release, the market's probability of a Federal Reserve rate hike in October rose from about 20% to 33%, the two-year US Treasury yield rose to 4.81%, and the US dollar index hit its highest level since April 2025. The Nasdaq closed down 1.88%. This data shifts policy discussions from "when to cut interest rates" to "whether interest rates still need to be raised," and directly increases the discount rate for highly indebted companies and long-term technology assets. It remains to be seen whether the interest rate meeting on October 27-28, service inflation, wages, and energy prices can decline.U.S. Bureau of Labor Statistics｜Reuters

2. Nvidia invests $250 million in computing power in the UK, adding security infrastructure to AI competition.

On October 14, Nvidia pledged to provide the UK with $250 million worth of accelerated computing resources over the next five years, equivalent to $50 million annually, for AI security and agent testing. The resources will support the UK AI Security Research Institute and the BOLD project at the University of Oxford, Imperial College London's robotics safety research, and related programs at University College London, focusing on assessing the risk of stronger models getting out of control in autonomous action, adaptation, and human-machine collaboration. The UK lacks leading domestic basic model developers, yet it was one of the first to establish a government-backed model evaluation agency, hoping to translate regulatory, testing standards, and research capabilities into global AI governance influence. For Nvidia, this not only expands its computing ecosystem but also embeds chip suppliers into the model evaluation and public policy system. The importance lies in the fact that investment in AI security is beginning to shift from a statement of principles to a pricable computing infrastructure; However, the provision of research resources by major hardware beneficiaries can also lead to issues of independence and conflict of interest. The next steps should include how resources are allocated, whether research results are made public, whether transnational evaluation standards have been formed, and whether advanced model manufacturers accept consistent external testing.Reuters

3. China's new loans rebounded to 1.08 trillion yuan in September, with targeted credit easing beginning to show results.

According to Reuters calculations based on cumulative data from the People's Bank of China, new RMB loans in September reached 1.08 trillion yuan, higher than the market expectation of 975 billion yuan and far higher than the 60 billion yuan in August, but still lower than the 1.29 trillion yuan in the same period last year. The structure shows that policy transmission is uneven: corporate loans jumped from 260 billion yuan in August to 1.29 trillion yuan, possibly driven by new policy financial instruments, project investment and quarter-end releases; Household loans improved from a decrease of 202.9 billion yuan in August to basically flat, but real estate and consumer confidence have not yet been significantly boosted. The year-on-year growth rate of existing RMB loans fell to a historical low of 4.8%, the growth rate of M2 fell to 7.2%, and the growth rate of existing social financing also slowed from 7.2% to 7.1%. This data shows that measures such as targeted interest rate cuts and mortgage subsidies at the end of September are supporting enterprises and projects, but aggregate demand remains weak, and the central bank is temporarily preferring structural tools rather than comprehensive interest rate and reserve requirement ratio cuts. The third-quarter GDP, medium- and long-term household loans, and real estate sales figures to be released on October 19 will determine whether existing policies are sufficient or whether further expansion of fiscal and monetary support is necessary.Reuters

4. Ukraine's Starlink and missile early warning systems are facing obstacles, leaving Europe with no short-term alternatives.

Ukrainian officials said on October 14 that Starlink's military-grade service, Starshield, experienced an interruption while the terminal was moving at high speed, affecting drone combat and air defense missions. Zelensky also stated that for the second consecutive night, Ukraine did not receive any advance warning from its allies regarding the Russian ballistic missile attack on Kyiv. The cause of the outage has not yet been confirmed, but Trump said the United States is still sharing intelligence. SpaceX did not immediately respond. The incident highlights Ukraine's simultaneous reliance on two irreplaceable capabilities from the United States: Starlink provides low-Earth orbit communications, and the U.S. space-based infrared system captures thermal signals from missile launches. OneWeb in Europe is not suitable for directly replacing frontline Starlink in terms of terminal size, power consumption, cost, and performance, and switching networks means replacing thousands of proprietary terminals. The EU IRIS² constellation is still several years away from being operational. The impact is not limited to the battlefield; it will also accelerate investment in European sovereign satellites, military communications, and space early warning, benefiting related operators and defense technologies. However, the financial costs and deployment cycle are high. It is necessary to confirm whether the outage was a technical failure or a service limitation, whether the warning data has been restored, and whether Europe can propose a transition plan.Reuters

5. Iran expands its ship attack tactics, and the risk of Hormuz spills over into the Gulf of Oman.

Two senior Iranian officials told Reuters on October 14 that Tehran has changed the type, frequency, and scope of its attacks on ships in the Strait of Hormuz, with goals including maintaining high oil prices and increasing pressure on Washington ahead of the U.S. midterm elections. U.S. officials confirmed that after Iran's radar capabilities were damaged, the Revolutionary Guard began using unarmed observers on small boats to identify merchant ships and U.S. military targets. In the past 48 hours, at least five drone attacks or related incidents involving oil tankers and other merchant ships have occurred around Hormuz, with some operations extending to the Gulf of Oman and the waters off Qatar and the United Arab Emirates. Before the war, about one-fifth of global oil and liquefied natural gas trade passed through the strait, and the current threat level is still assessed as "serious" by the U.S.-led Joint Maritime Information Center. Iranian officials' claims of a "complete blockade" have not yet materialized, and some export shipments are resuming, but the increased frequency of attacks will drive up insurance, charter, and inventory costs. The key issues going forward are actual navigation volume, escort scale, shipowner diversion, whether oil prices can break through the risk range, and whether the US and Iran will further escalate their military operations.Reuters

Market Correlation and Today's Observation

Today's transmission chain is quite clear: the security risk of Hormuz supports oil prices, energy prices drive up US inflation, and then the Federal Reserve's expectations push up short-term interest rates and the dollar, ultimately compressing the valuation of global risk assets. If Brent crude remains above $100 a barrel, accompanied by rising transportation premiums, the market's pricing for an October or December rate hike will be more solid, and US Treasury yields and the dollar may continue to suppress non-interest assets other than gold, emerging market currencies, and highly indebted technology companies. The AI sector will also be divided: Nvidia's investment in secure computing power strengthens long-term demand, but capital-intensive cloud service providers, data centers, and companies that have not yet generated stable cash flow are most sensitive to financing costs. Improvements in China's credit data are conducive to infrastructure construction, equipment upgrades, and corporate financing expectations, but this does not prove that household demand has recovered. The RMB may face both pressure from a strong US dollar and policy support. Going forward, we should observe the implementation of GDP, mortgage and fiscal projects in the third quarter. Commodity markets need to distinguish between risk premiums and genuine supply disruptions: traffic volume, tanker rates, and inventory are more important than verbal threats. Europe may increase its defense and space investment due to its reliance on Ukrainian satellites, but this will also increase budget and bond issuance pressures. Today's focus will be on whether the US dollar and US Treasury bonds will continue to rise in tandem, the sensitivity of oil prices to new attacks, credit spreads for technology stocks, and whether Chinese policies can spread from corporate loans to consumer demand.

Cover image:Winston Chen / Unsplash