Traders raised odds of a 50 bps Fed rate hike after October consumer prices rose 0.4%. Fed Governor Christopher Waller said, "a 50 basis point hike in the policy rate should be considered at the December meeting." This news got the bond market moving as core inflation showed persistent growth.

New data has revealed that US consumer prices rose faster than anticipated, prompting speculation about interest rate changes. Fed Governor Christopher Waller suggested a half percentage point hike may be necessary if core prices continue rising. The Consumer Price Index showed a month-over-month increase of 0.4% in October, with core inflation remaining persistent. The bond market reacted strongly to these developments, significantly affecting Treasury yields.

Odds the US Federal Reserve may raise interest rates half a percentage point at its December meeting jumped on Tuesday after new data showed prices rising faster than expected and clearing the bar set by one key policymaker for considering a quicker pace of rate hikes.

The Consumer Price Index rose 0.4% month over month in October, a drop from the 0.6% in September as energy inflation receded, but the index excluding volatile food and energy prices rose 0.3% for the third month in a row, evidence of persistent "core" inflation that also showed signs of spreading through the economy.

As on 10 Nov 2026, 08:31 PM IST

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In comments overnight in London, Fed Governor Christopher Waller said that a core reading of 0.3% for October would prompt him to consider a half point hike at the Fed's December 8-9 meeting. With a quarter-point rate hike all but assured, market bets on a larger increase were rapidly building amid a broad bond market selloff and at midmorning were close to 15%.

If core consumer prices rise 0.3% or more from September, "a stronger policy move may be needed," Waller said at a conference hosted by King's Business School and the Money Macro & Finance Society. "In that case, I believe a 50 basis point hike in the policy rate should be considered at the December meeting."

Sticking with a smaller rate increase, Waller said, risks hurting the Fed's inflation-fighting credibility given inflation that's too high and appears to be broadening out. Economists had expected core monthly inflation to drop to 0.2% in October.

The CPI data and Waller's comments drove a powerful selloff in the US Treasury market, with the yield on 2-year notes - a proxy for Fed policy expectations - rising by the most since early April 2025.

Dallas Fed President Lorie Logan and Fed Vice Chair for Supervision Michelle Bowman speak later on Tuesday.