Hot October inflation report rattles markets
TLT•US consumer prices rose 0.4% in October, above economists’ 0.3% forecast, while core CPI increased 0.3%, also more than expected. Markets reacted as traders priced in a December rate hike, and US stocks fell.
1. Inflation runs hotter
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, excluding food and energy, rose 0.3%, against a 0.2% forecast. The BLS did not publish a year-over-year inflation reading because there was no October 2025 comparison base.
2. Markets reprice rates
US stocks fell, with the Nasdaq down 1% and the S&P 500 down 0.6%. The two-year Treasury yield rose 15 basis points to 4.69%, and the 10-year yield rose 9 basis points to 4.96%. Fed funds futures showed a 100% expectation of a rate hike in December, with more than 10% indicating an expected half-point increase.
