Bonds
Treasury Yields Climb After October CPI Tops Forecasts, With the 10-Year Near 4.94% and December Hike Odds Near 85%
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Headline inflation rose 0.4% and core prices 0.3%, both above economists' estimates, and short-dated yields rose the most.
By Emma Cruz ·
Consumer prices rose faster than expected in October, and bond traders responded by pushing Treasury yields higher and firming up bets that the Federal Reserve will raise interest rates again in December. The Bureau of Labor Statistics said the consumer price index rose 0.4% on a seasonally adjusted basis in October, after a 0.6% gain in September [1]. A Reuters poll of economists had called for 0.3% [2].
Underlying inflation was also a touch firmer than forecast. The index excluding food and energy rose 0.3%, the same pace as in August and September, while economists had looked for 0.2% [1][2]. Energy prices rose 0.7% after a 5.2% jump in September, and gasoline rose 1.0% after a 9.1% surge the month before [1]. Shelter costs rose 0.3% and food prices rose 0.5% [1].
One unusual feature of this report is the missing yearly figure. The BLS said it did not collect survey data for October 2025 because of a lapse in appropriations, so it did not publish a 12-month change for October [1]. Reuters noted that annual inflation stood at 3.7% in September, and it tied the recent price pressure to higher oil costs from the U.S.-Israeli war with Iran and to tariffs imposed last year [2].
The reaction in rates was swift. Shortly after the release, Reuters reported that the two-year Treasury yield had risen 13 basis points to 4.68% and the 10-year yield had risen 7.6 basis points to 4.94%, a sign that shorter maturities, which are most sensitive to the Fed's policy path, moved the most [2]. The dollar index gained 0.3% to 102.05, and gold fell 2% to $4,057 an ounce [2]. By late morning, Yahoo Finance showed the five-year yield near 4.75%, the 10-year near 4.93% and the 30-year near 5.29% [3].
Rate-hike pricing firmed along with yields. CME FedWatch data showed roughly an 85% chance of a quarter-point increase in December and about a 15% chance of a half-point move, according to Reuters, and Yahoo Finance cited similar odds of 84% and 15% [2][3]. Fed Governor Christopher Waller has said the central bank should raise rates in December even if inflation cools, and that it could consider a larger move if inflation worsens [2]. Brian Jacobsen of Annex Wealth Management told Reuters that core inflation is too high and that the oil shock has spread into core prices [2].
Equities felt the pressure from higher yields, which raise borrowing costs and lower the present value of future earnings. In late-morning trading the S&P 500 was down about 0.8%, the Nasdaq Composite was down about 1.2% and the Dow Jones Industrial Average was down about 0.7%, according to Yahoo Finance [3]. Brent and WTI crude fell about 3% after the open, Yahoo reported, as oil prices continued to ease [3].
Energy is the swing factor to watch. The BLS data show that unadjusted gasoline prices fell 0.7% in October, and crude has retreated in recent sessions, which could take some pressure off the headline index in coming months [1][3]. The harder question for the Fed is whether the 0.3% monthly pace in core prices, which has now held for three straight months, begins to slow. The next inflation report and the December policy meeting will show whether traders' expectations of a hike, and the debate over its size, hold up.
Sources:
[1] U.S. Bureau of Labor Statistics, "Consumer Price Index News Release - 2026 M10 Results", November 10, 2026. https://www.bls.gov/news.release/archives/cpi_11102026.htm
[2] Reuters (via Investing.com), "Hot October inflation report rattles markets", November 10, 2026. https://www.investing.com/news/economic-indicators/hot-october-inflation-report-rattles-markets-5015775
[3] Yahoo Finance, "Stock market today: Dow, S&P 500, Nasdaq slip after CPI data raises Fed rate-hike bets", November 10, 2026. https://finance.yahoo.com/markets/live/stock-market-today-tuesday-november-10-dow-sp-500-nasdaq-inflation-data-cpi-090627830.html
This article was produced with AI assistance. It is for informational purposes only and is not financial advice. StockVolt and its authors may hold positions in securities mentioned.