US October CPI rises 0.4% month-on-month, driving a broad increase in US Treasury yields

In October, the US CPI rose 0.4% month-on-month, higher than the market expectation of 0.3%. Coupled with hawkish signals from Federal Reserve Board member Waller, this pushed US Treasury yields higher across the board. The 10-year US Treasury yield rose to 5.012%, and the 2-year yield climbed to 4.759%. The market currently expects an 86% probability of a 25 basis point Fed rate hike in December, with the probability of a 50 basis point hike rising to 14%. Waller stated that if inflation is significantly higher than expected, the Federal Reserve may need to take more aggressive policy action. European bond markets were also affected, with the German 10-year government bond yield rising to 3.307%, the highest level since November 3.