Stocks fall as the 10-year Treasury yield nears 5% mark

Detailed summary

'I don't think they should be raising another 25 basis points,' says a portfolio manager about the Federal Reserve's benchmark interest rate Stocks fell as the 10-year Treasury…

'I don't think they should be raising another 25 basis points,' says a portfolio manager about the Federal Reserve's benchmark interest rate

Stocks fell as the 10-year Treasury yield moved close to the 5% threshold Tuesday after October's hot inflation report.

Bond yields surged and stocks slumped Tuesday after the consumer inflation report for October suggested the Federal Reserve might need to up the throttle on its inflation fight.

The consumer-price index report showed that prices across broad categories of goods and services moved higher, gaining 0.4% in October and topping the 0.3% forecast.

After the report was released, the yield on the policy-sensitive 2-year Treasury note BX:TMUBMUSD02Y shot up 18 basis points to 4.725%, as the chart below shows, logging its biggest one-day rise since April 2025, according to FactSet data.

That's well above the 4% level that marks the top of the Fed's short-term policy range, indicating that more interest-rate hikes could be coming.

"We are so heavily dependent on oil around the world to make and do things, it drives everything up," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management, after the inflation report.

Yet talk of a half-point rate hike would be "irresponsible," because higher rates won't resolve the oil shock from the Iran war, Pavlik said. Instead, a jumbo hike would hurt consumers already facing higher borrowing and fuel costs.

"I don't think they should be raising another 25 basis points," he added.

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