Edmond de Rothschild: US inflation surprise fuels Fed rate hike expectations
SPY•October US consumer prices rose 0.4% month over month, above the 0.3% forecast, reinforcing expectations of a December Fed rate hike. Treasury yields rose, gold fell below $4,000 an ounce, and the S&P 500 and Nasdaq 100 gained 2.9% and 4.8%, respectively.
1. Inflation and markets
October US consumer prices rose 0.4% month over month, exceeding forecasts of 0.3% and reinforcing expectations of a December Fed rate hike. US 10-year Treasury yields climbed 27 basis points over the week to 5.12%, while gold fell below $4,000 an ounce; the S&P 500 rebounded 2.9% and the Nasdaq 100 gained 4.8%.
2. Bond returns
European high-yield bonds returned 0.6% as spreads tightened 20 basis points. Investment-grade bonds lost 0.14% amid rising yields.
