NEXT GENERATION
Artificial intelligence: Anthropic IPO, a trillion-dollar reality check for AI
Enrico Chinello, Next Generation Research Analyst, Julius Baer
Anthropic is marketing its IPO offering at USD 70–USD 78 per share, valuing the Claude maker at up to USD 1.4 trillion fully diluted. While these are impressive figures, they are well below the USD 2 trillion reported earlier this year by the press. Beyond its record size, the deal gives public markets a first full look at frontier artificial intelligence economics. Demand growth, intelligence prices, and compute capacity commitments remain the key areas to watch. We remain Constructive on the Cloud Computing & AI theme.
Anthropic has set terms for its Nasdaq listing: 825 million shares at USD 70USD 78, raising up to USD 64 billion in the base deal and around USD 90 billion including a USD 26 billion private placement with chip and cloud partners. With these figures, the implied valuation would be between USD 1.1 trillion and USD 1.4 trillion. This is well below the reportedly target valuation range of USD 1.5 trillion to USD 2 trillion earlier this autumn. Pricing is due on 18 November. Anthropic has been able to demonstrate formidable growth so far. Revenue reached USD 33 billion in the first nine months this year, a 13-fold annual increase. The annualised revenue run-rate still appears on track to reach USD 65 billion to USD 67 billion this year. On our calculation, the top of the range equals roughly 21x the 2026 annualised revenue run-rate. As we wait for the public market reaction, Anthropic’s listing arrives at a moment where three key areas are top of mind for artificial intelligence (AI) investors. First, demand: all indicators signal continued strength, suggesting that enterprise adoption is real and broadening, which supports the scale of AI investments. Second, pricing power: cheaper models from American and Chinese competitors have pushed the average intelligence cost down, implying that volumes must keep outrunning price deflation to continue to post revenue growth. Third, capital intensity: AI model providers have generally signed large compute capacity agreements, predicated on impressive revenue growth to sustain these expenses. The political angle, where regulators will need to find a balance between potentially stricter data centre regulation and the need to continue to support AI as a national strategic priority, introduces another complexity to the debate. For investors, the deal sets a public, market clearing price for frontier AI, as well as an expectation baseline for OpenAI’s listing expected in 2027. The target valuation range below prior indications, in our view, does not mean the AI wheel is broken, but it signals that markets are starting to discriminate between growth and returns. We believe these are healthy developments, which could contribute to better re-alignment of what is a sustainable, long-term growth trajectory for the AI ecosystem. We remain Constructive on Cloud Computing & AI.
COMMODITIES
Gold and silver: Fearing the Fed, again…
Carsten Menke, Head Next Generation Research, Julius Baer
Selling pressure in the gold and silver markets intensified again on fears of further interest rate increases by the US Federal Reserve. The markets are still grappling with a dramatic shift in the fundamental backdrop compared with a year ago. While fundamentals played their part in pushing prices lower, flows acted as an amplifier. Nervousness prevails, suggesting that volatility is set to stay elevated at least in the short term. The medium-to-longer-term outlook remains compelling and we stick to our established views.
Just when it appeared that gold and silver had regained their footing, both metals suffered another setback. Selling pressure intensified after US Federal Reserve (Fed) Governor Christopher Waller suggested that a 50-basis-point rate hike could be considered at the central bank’s next meeting in December. The US inflation data did not provide any help in alleviating fears of further interest rate increases, pushing gold and silver prices down by as much as 2.5% and 3.5%, respectively. The gold and silver markets are again fearing the Fed, while still grappling with a dramatic shift in the fundamental backdrop compared with a year ago. This time last year, the markets expected lower US interest rates and a weaker US dollar, while at the same time being increasingly concerned about political interference with the Fed. Today, the backdrop could not be more different. While fundamentals played their part in pushing prices lower over the course of this year, flows acted as an amplifier. Looking at the source of the fastest flows, the futures market, there has been some position squaring in the US. Speculative traders and trend followers were caught on the wrong side of the market after the US Treasury buyback announcement in late summer. Since then, sentiment has become much less bullish, a shift reflected in the performance of gold and silver prices. Something similar has been happening in China, which has become a hotspot for speculation in the gold and silver markets this year. Some of the selling pressure in China may also have been linked to a crackdown on offshore capital, prompting certain investors to liquidate their gold and silver positions to foot the tax bill. While this was unlikely a major source of selling, it added to an ongoing shift in market sentiment. Nervousness prevails in the gold and silver markets, suggesting that volatility is set to stay elevated at least in the short-term. From a flow perspective, we still see the level of USD 4,000 per ounce of gold and USD 50 per ounce of silver as key. Prices breaking decidedly below those levels could trigger more selling, in particular from Western investors, who have been holding onto their positions as of late. Taking a medium- to longer-term perspective, the outlook remains compelling. Inflationary pressure in the US should ease over the course of next year, allowing the Fed to be less aggressive than currently feared. Both gold and silver should furthermore be supported by renewed concerns about US indebtedness and the associated interest rate burden. While gold also benefits from central-bank buying as a strong structural source of demand, this is not the case for silver. We stick to our views: Constructive on gold and Neutral on silver.
MACRO
US inflation: Higher inflation increases pressure for a further rate hike
David Kohl, Chief Economist, Julius Baer
US inflation rose 0.4% m/m in October, above expectations but slower than in previous months as petrol price pressures eased. Core inflation remained slightly firm, driven by services, while shelter costs moderated. With inflation still too high but not re-accelerating, the Fed is expected to raise rates by 25bp in December before adopting a more gradual policy stance.
Consumer prices in the US rose by 0.4% m/m in October, exceeding consensus forecasts; however, the increase was smaller than in previous months, when consumer prices had risen by 0.6%. As the October Consumer Price Index (CPI) from the previous year was not published due to the government shutdown, no y/y inflation rate was available. Following a 9.1% jump in September, petrol prices rose by just 1%, thereby contributing significantly to the marked slowdown in inflation. Nevertheless, the higher-than-expected inflation figures, combined with earlier comments by Fed Governor Christopher Waller – who advocated a half-percentage-point interest rate rise should inflation continue to accelerate – led to a significant reassessment of the expected interest rate path. The implied probabilities now stand at 85% for a 25bp rate rise at the December FOMC meeting, 15% for a 50bp rate rise, and 0% for the policy rate to remain unchanged. Underlying price pressures, as measured by the CPI excluding food and energy, also came in slightly stronger than expected, slowing only marginally from 0.33% in September to 0.3% in October. The shelter component, the largest component of the CPI, slowed from 0.4% to 0.3%, and core goods prices also showed a smaller increase. Only core service prices, excluding the shelter component, recorded a rise, with prices for transport and recreation services rising more rapidly. Overall, US inflation in October shows little sign of accelerating underlying inflationary momentum. At the same time, US inflation remains too high for the Fed, making a further interest rate rise at the next FOMC meeting inevitable. Against the backdrop of falling oil prices – which will be reflected in lower energy prices in the coming months – and in view of tightening financial conditions – as bond yields have risen again and there has been a significant sell-off in the equity markets – we expect the Fed to take a gradual approach to recalibrating its monetary policy and to raise interest rates by 25bp in December. Thereafter, it will rely on base effects and headwinds to growth that would allow inflation to move closer to its 2% target.
FIXED INCOME
Upcoming Fed purchases: Reserve management, not quantitative easing
Afonso Borges, Fixed Income Research Analyst, Julius Baer
Dollar funding conditions have tightened, raising the prospect that the Fed could reinitiate reserve management purchases. These would be intended to maintain ample reserves and control overnight rates, and should not be understood as an easing of monetary policy.
Dollar funding conditions have tightened in recent weeks. The Secured Overnight Financing Rate (SOFR) recently traded 7bp above the interest rate on reserve balances, while repurchase agreement (repo) rates have become firmer, and Treasury bills (short-term US government securities) have cheapened relative to the Overnight Index Swap (OIS) rate. The pressure reflects a mix of heavier bill issuance, an elevated US Treasury cash balance, shifts in repo volumes, and the Canadian year end. Some of these forces are temporary, but others suggest that reserves are moving closer to the lower end of the Fed’s comfortable range. Overall, the resumption of reserve management purchases appears increasingly likely, potentially before year end. A few firm SOFR fixings (such as those seen last week) are insufficient to move the Fed, but if SOFR trades consistently near the top of the policy corridor, purchases will become likely. The Fed has little reason to test precisely where ample reserves become scarce. The lesson of the September 2019 repo shock was that the boundary is difficult to identify in advance and that crossing it can produce a sudden, nonlinear adjustment in funding markets. Recent Fed communication has placed greater emphasis on preserving control over overnight rates, which reduces the risk of a similar policy mistake. Tighter liquidity is visible in funding markets, but it has not spilled over materially into broader financial conditions, nor should it. Outside episodes in which the Fed misjudges the lowest comfortable level of reserves, fluctuations in bank reserves have generally remained a ‘plumbing’ issue. If purchases resume, they should therefore be understood as reserve management: purchases of Treasury bills designed to keep overnight rates within the target range. They would expand the balance sheet in nominal terms, but would not signal easier monetary policy or an attempt to compress longer-term yields.
Indonesia: Q3 GDP growth surprised to the upside despite the gloom
Sok Yin Yong, Fixed Income Analyst Asia, Julius Baer
Indonesia’s Q3 2026 GDP growth surprised to the upside, and the government expects growth momentum to continue into Q4. Inflation has also eased in October. However, Indonesia still faces challenges from IDR weakness, political and fiscal uncertainties, and concerns over MSCI’s review of Indonesia’s equity market accessibility, which have weighed on investor sentiment. Against this backdrop, Bank Indonesia (BI) could keep rates on hold this month, but persistent IDR weakness and a hawkish Fed could pressure BI to eventually hike rates. However, the timing is uncertain and depends on currency volatility and global financial conditions.
Indonesia’s economy grew 5.5% y/y in Q3 2026, above market expectations of 5.2% and up from Q2’s 5.3%, driven by steady consumption, robust investment, and improved net exports. Household consumption (+5.0% y/y, albeit slightly softer) was supported by energy subsidies and government stimulus measures, which helped to cushion imported inflation. Government spending moderated but remained strong at 8.95% y/y (after frontloaded expenditure in prior quarters). Investment growth (+6% y/y) was mainly driven by government capital expenditure under the flagship priority programmes, while the drag from net exports narrowed to -0.3ppt (Q2: -0.9ppt). By sector, manufacturing saw strong growth of 5.9% y/y, but agriculture slowed to 0.5% y/y due to seasonal factors and El Niño conditions. Services growth improved to 6.8% y/y, led by accommodation and food services. The government expects growth momentum to continue into Q4 2026, supported by stimulus measures and continued strength in several high-frequency economic indicators. The state budget targets growth of 5.4% for 2026, although the finance minister recently indicated growth could reach 5.5%. BI forecasts growth of 4.9%–5.7% in 2026. Despite the resilient growth backdrop, Indonesia faces several headwinds including IDR depreciation pressures, political and fiscal uncertainties, and concerns over MSCI’s review of Indonesia’s equity market accessibility. These factors have weighed on investor sentiment and contributed to foreign equity outflows. Meanwhile, October’s headline inflation eased slightly to 3.23% y/y (September: 3.28%). While food prices and transport costs remained elevated, slower inflation in other components more than offset these increases, resulting in a slight decline in inflation. Personal care items, driven largely by gold jewellery, were also among the largest contributors. Core inflation moderated to 2.56% y/y (September: 2.84%). Inflationary pressures are likely to rise in the coming months as El Niño keeps food prices elevated and volatile oil prices put upward pressure on transport and business operating costs. Against this backdrop, BI is likely to keep its policy rate on hold at 5.75% at its November meeting while continuing to use alternative tools to support the IDR (-2.98% versus the USD since 9 September) and to maintain financial stability. However, persistent IDR weakness and a hawkish Fed suggest BI could eventually hike rates, although the timing remains uncertain and will likely depend on currency volatility and global financial conditions.
