US yields climb, stocks fall as inflation data boosts chances for larger Fed rate hike

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By Caroline Valetkevitch and Shashwat Chauhan Nov 10 (Reuters) - US Treasury yields jumped and Wall Street stocks fell on Tuesday after a hotter-than-anticipated US inflation reading boosted chances

Nov 10 (Reuters) - US Treasury yields jumped and Wall Street stocks fell on Tuesday after a hotter-than-anticipated US inflation reading boosted chances for a Federal Reserve interest-rate hike of half a percentage point next month.

The 2-year note yield, which typically moves in step ‌with Fed rate expectations, was last up 18.44 basis points at 4.731%. It was its biggest one-day jump since the April 2025 "tariff tantrum," when US President ‌Donald Trump announced trade levies on imports from around the world. The yield on benchmark US 10-year notes rose 12.55 bps to 4.988%.

The US Consumer Price Index rose 0.4% in October after advancing 0.6% in ​September, according to official data. Economists polled by Reuters had forecast the CPI climbing 0.3% over the month.

In addition, core CPI — which strips out volatile food and energy prices and is often referred to as "underlying inflation" — landed at 0.3%, higher than the 0.2% consensus.

Expectations that the Fed may raise rates half a point at its December policy meeting jumped after the data. Before the data landed, Fed Governor Christopher Waller said in London that a core reading of 0.3% for October would prompt him to consider a half-point hike at the Fed's ‌December 8 to 9 meeting.

The Fed more typically hikes or ⁠cuts rates in 25-basis-point increments.

Lower oil prices recently have helped ease some of the inflation concerns that have been on investors' radar since the US-Israeli war with Iran erupted at the end of February.

"It's not just headline CPI that is too high, but the oil ⁠shock has seeped into core," said Brian Jacobsen, chief economic strategist at Annex Wealth Management in Menomonee Falls, Wisconsin.

"The Fed is probably now more concerned about the idea of AI crowding out other activity and pushing up prices. Forget about oil. The new Fed worry is the cost of hiring plumbers and electricians."

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