Hot October inflation report rattles markets
TLT•U.S. consumer prices rose 0.4% in October, above economists’ 0.3% forecast, while core CPI rose 0.3%. The data strengthened expectations for a December Federal Reserve rate increase, and Treasury yields rose.
1. Inflation tops forecasts
The Consumer Price Index rose 0.4% in October after gaining 0.6% in September, the Labor Department’s Bureau of Labor Statistics said. Economists had forecast a 0.3% increase. Core CPI, which excludes food and energy, rose 0.3%, above the 0.2% forecast. The BLS did not publish a year-over-year reading because last year’s government shutdown prevented collection of October 2025 data.
2. Rate outlook and markets
The report kept the Federal Reserve on course to raise interest rates in December. Futures priced in an 85% chance of a 25-basis-point increase and a 15% chance of a 50-basis-point increase. Two-year Treasury yields rose 13 basis points to 4.68%, while 10-year yields rose 7.6 basis points to 4.94%.
