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%, also exceeding expectations. The report added to expectations for a December Federal Reserve rate hike, and U.S. stocks fell as Treasury yields rose.
1. Prices rise faster than forecast
The Consumer Price Index increased 0.4% in October after rising 0.6% in September, the Labor Department’s Bureau of Labor Statistics said. Economists had forecast a 0.3% monthly increase. Core CPI, excluding food and energy, rose 0.3%, compared with a 0.2% forecast.
2. Rate outlook shifts
The BLS did not publish a year-over-year inflation reading because last year’s federal government shutdown prevented collection of October 2025 consumer price data, leaving no comparison base. Annual consumer inflation was 3.7% in September, above the Federal Reserve’s 2% target. Fed Governor Christopher Waller said the central bank should raise rates in December and consider a half-point increase if inflation worsens.
3. Markets react to report
U.S. stock futures fell, with Nasdaq futures down 1.4% and S&P 500 futures down 0.8%. The two-year Treasury yield rose 13 basis points to 4.68%, while the 10-year yield gained 7.6 basis points to 4.94%.
