US October inflation exceeded expectations, pushing Treasury yields higher, lifting the dollar and weighing on stocks, precious metals and cryptocurrencies. Markets increased the probability of a 50-basis-point Federal Reserve rate increase in December after the core CPI reading matched the threshold identified by Fed Governor Christopher Waller.

The October CPI report showed headline inflation rising 0.4% month over month, compared with expectations of 0.3% and September’s 0.6% increase. Core CPI, which excludes food and energy, rose 0.3% against expectations of 0.2%, marking the third consecutive month at 0.3% on a rounded basis.

The Bureau of Labor Statistics had no October 2025 comparison because of last year’s government shutdown, so the October report did not include year-over-year readings. September’s annual rates were 3.7% for headline CPI and 2.6% for core CPI.

Energy prices rose 0.7% in October after climbing 5.2% in September, helping explain the moderation in headline inflation. Shelter increased 0.3% and accounted for more than 30% of the headline rise, while food prices increased 0.5%. Motor vehicle insurance rose 0.7%, airfares gained 0.4% and used-car prices fell 1.2%. InvestingLive estimated that core services excluding shelter, often called supercore inflation, rose about 0.4% during the month.

The unrounded core reading was 0.297%, close to Waller’s 0.3% threshold for considering a larger December move. Current market pricing put the probability of a 50-basis-point December increase at 10%, with a 25-basis-point increase at 90%.

October PCE inflation and November payrolls remain due before the Federal Reserve’s December meeting. PCE is the Fed’s preferred inflation measure, while payrolls will provide another indication of labor-market conditions and the scope for further rate increases.

Fed officials focus on persistent inflation

Waller said before the CPI release that he would support a 25-basis-point rate increase in December even if October inflation improved. He also said a core CPI reading of 0.3% or higher could bring a 50-basis-point move into consideration. Waller described the labor market as broadly balanced and said he was concerned about the breadth of price increases, including whether higher energy costs were spreading to other goods and services. His comments were reported by InvestingLive: https://investinglive.com/technical-analysis/morning-kickstart-oil-slides-as-waller-puts-a-half-point-hike-in-play-markets-brace-for-cpi

Fed Governor Michelle Bowman said after the release that the report suggested inflation pressures could persist for longer and that labor-market conditions appeared to be firming. She identified October PCE and November payrolls as important data still to come before the December decision. Bowman also said she wanted to assess the durability of AI-related demand and the effects of geopolitical risks on the economy. InvestingLive reported her comments here: https://investinglive.com/central-banks/fed-s-bowman-persistent-inflation-firming-labor-conditions-suggest-work-to-do

Kansas City Fed President Jeff Schmid described current monetary policy as fairly accommodative. He said housing was an area where higher rates appeared to be having an effect, but saw limited evidence of restraint elsewhere. Schmid also pointed to concerning price trends beneath the energy headlines and argued that the current rate setting was doing too little to slow inflation. His comments were reported by InvestingLive: https://investinglive.com/central-banks/fed-s-schmid-some-concerning-trends-in-prices-underneath-the-whole-energy-story

Dallas Fed President Lorie Logan said the Fed needed at least two more quarter-point rate increases and might be able to move faster during the winter. After those increases, she said, policymakers could have a case for pausing to assess the economy. Logan also said higher bond yields indicated that monetary policy still had work to do. InvestingLive reported her comments here: https://investinglive.com/central-banks/fed-s-logan-it-s-clear-that-fed-needs-at-least-two-more-quarter-point-rate-hikes

Together, the comments kept inflation at the center of the policy discussion while emphasizing different elements of the December decision. Waller discussed the size of the next move, Logan outlined a path of at least two additional increases, Schmid questioned whether policy was restrictive enough, and Bowman highlighted the data still pending.

Treasury yields and dollar rise

The two-year Treasury yield led the move higher as traders reassessed the Fed’s likely actions over the next several meetings. Yields in the late-session snapshot were:

• Two-year: 4.7335%, up 18.65 basis points
• Five-year: 4.8121%, up 15.31 basis points
• Ten-year: 4.9875%, up 12.55 basis points
• 30-year: 5.3502%, up 9.42 basis points

The 10-year yield traded above 5% during the session before moving back just below that level in the late snapshot. A weak $42 billion 10-year Treasury auction added to the pressure. The notes stopped at a high yield of 5.02%, 1 basis point above the when-issued yield. The bid-to-cover ratio was 2.46 times, below the 2.60-times average. Strong direct demand only partly offset weaker indirect demand and a larger dealer takedown. InvestingLive reported the auction details here: https://investinglive.com/news/u-s-treasury-sells-42-billion-of-10-year-notes-at-a-high-yield-of-5-02

The dollar gained against every major currency in the late-session snapshot. AUDUSD fell 0.91% to 0.6863, the largest decline among the major currency pairs. GBPUSD dropped 0.75% to 1.3339, EURUSD fell 0.55% to 1.1161, and USDJPY rose 0.55% to 158.77. USDCAD posted the dollar’s smallest gain, rising 0.51% to 1.4189.

US stocks give back early Anthropic-related gains

The major US equity indexes ended lower after an early lift linked to updated terms for Anthropic’s initial public offering. Late-session levels were:

• Dow Jones Industrial Average: 52,237.23, down 0.30%
• S\u0026P 500: 7,520.93, down 0.38%
• Nasdaq Composite: 20,065.87, down 0.74%
• Russell 2000: 2,821.38, down 0.68%
• Nasdaq 100: 27,740.80, down 0.60%

Anthropic began its IPO roadshow with revised terms after retracting preliminary figures sent to bankers. The Claude maker and selling shareholders are offering 825 million shares at $70 to $78 each. The offering could be worth as much as $64.4 billion, with an implied valuation of up to $1.4 trillion. The shares are expected to begin trading on Nasdaq on November 19 under the ticker ANT. InvestingLive reported the offering details here: https://investinglive.com/stocks/anthropic-retracts-ipo-pricing-details-sent-to-bankers-says-figures-were-inaccurate/?utm_source=chatgpt.com

Reports that orders covered the available shares helped push the Nasdaq indexes into positive territory earlier in the session, but that move faded. Demand for the offering provided one indication of investor appetite for AI, while the rise in yields increased the hurdle for growth-stock valuations.

Nvidia fell another 6% and was testing a key support zone, according to InvestingLive: https://investinglive.com/stocks/nvidia-falls-another-6-and-is-now-testing-a-key-support-zone

European stocks mostly higher

European equities were mostly higher, led by Spain. The regional index moves were:

• Spain’s IBEX 35: up 0.98%
• Italy’s FTSE MIB: up 0.69%
• France’s CAC 40: up 0.55%
• Germany’s DAX: up 0.31%
• UK’s FTSE 100: down 0.29%

InvestingLive’s market report is available here: https://investinglive.com/stocks/european-stocks-mostly-higher-as-hot-us-cpi-sends-treasury-yields-above-5

Oil, metals and cryptocurrencies decline

WTI crude fell 0.56% to $86.36 after trading as low as $83.88. Brent crude declined 0.67% to $91.95. Hopes for progress in US-Iran talks remained part of the market background. Iran’s Rezaei said that no negotiations were currently taking place between Tehran and Washington, according to InvestingLive: https://investinglive.com/commodities/iran-s-rezaei-no-negotiations-currently-taking-place-between-tehran-and-washington

Lower crude prices offered some relief on energy costs, but the bond market focused on the CPI surprise and the implications for Federal Reserve policy. Gold fell 2.59% to about $4,032, while silver dropped 3.54% to $51.52. A stronger dollar and higher Treasury yields weighed on both metals.

Bitcoin fell 1.42% to about $73,881, moving in the same direction as growth stocks and testing its 200-day moving average after the hotter CPI data. Ethereum declined 3.18% to $2,059.42. InvestingLive reported on Bitcoin’s technical level here: https://investinglive.com/cryptocurrency/bitcoin-tests-its-200-day-moving-average-after-hotter-us-cpi-data

Other items highlighted in the InvestingLive Americas FX news wrap included Bank of Canada minutes saying the Governing Council saw a possible need to raise rates further; ECB Executive Board member Philip Lane saying the bar for directional rate guidance was high; and a report that European stocks remained mostly higher as US Treasury yields moved above 5%. The Bank of Canada minutes were reported here: https://investinglive.com/central-banks/bank-of-canada-minutes-governing-council-sees-possible-need-to-hike-rates-further, while Lane’s comments were reported here: https://investinglive.com/central-banks/ecb-s-lane-says-the-bar-for-directional-rate-guidance-is-high.

The two-year Treasury yield emerged as the clearest market indicator of the reassessment surrounding Fed policy. October CPI brought a larger December rate increase into the discussion. The next major tests are whether October PCE confirms persistent core-price pressures and whether November payrolls provide the Federal Reserve with room to move faster.

Source: InvestingLive Americas FX news wrap, 10 Nov