U.S. Two-Year Yields Jump 17.6 Basis Points After October Inflation Tops Forecasts
Key Facts
The yield on two-year U.S. Treasuries closed 17.6 basis points higher on Tuesday, November 10, after rising as much as 20 basis points during the session, according to market commentary published by ActionForex on November 12. Yields on 10- to 30-year bonds rose by between 7.4 and 10.8 basis points, extending the move beyond the two-year maturity. The jump followed data showing the Consumer Price Index for All Urban Consumers rose 0.4% month over month in October, after a 0.6% increase in September, according to the U.S. Bureau of Labor Statistics. Economists polled by Reuters had expected a monthly increase of 0.3%. The core index, which excludes food and energy, also rose 0.3%, above expectations for a 0.2% increase. The higher-than-expected reading refocused attention on the path of U.S. interest rates, with markets shifting toward greater monetary tightening at the December meeting.
Core inflation remained at 0.3% for a third consecutive month, matching the pace recorded in August and September, according to the Bureau of Labor Statistics. The reading carries weight in light of earlier remarks by Federal Reserve Board member Christopher Waller, who said a 0.3% or greater increase in an important measure of core inflation in October would warrant the central bank considering a half-percentage-point rate increase in December. After the data were released, Reuters reported that markets had fully priced in the probability of an increase of at least 25 basis points at the December meeting. Those odds stood at 84% on Monday, November 9, while the probability of a 50-basis-point increase rose to 11.8%. In Tuesday trading, Reuters reported that the two-year yield rose 18.44 basis points to 4.731%, describing the move as the biggest one-day jump since the tariff turmoil in April 2025. It also reported that the 10-year yield rose 12.55 basis points to 4.988%.
The market reaction extended to stocks, gold and the dollar in Tuesday's session. Major U.S. indexes closed lower: the Dow Jones fell 0.30%, the S&P 500 lost 0.38%, and the Nasdaq Composite declined 0.74%, according to Reuters. Another Reuters report said spot gold fell 2.62% to $4,030.56 an ounce and the dollar rose after the inflation data were released. In morning trading, Reuters reported that the two-year yield climbed 19.07 basis points to 4.738%, and that the probability of a December rate increase reached 89%, according to the CME FedWatch tool. Before the report was released, Waller had tied his call to consider a larger increase to core inflation reaching the 0.3% threshold, the rate recorded by the index in October. For the headline price index, the unadjusted CPI-U stood at 337.511 in October, according to the Bureau of Labor Statistics.
Attention now turns to the October Producer Price Index report, scheduled for release by the Bureau of Labor Statistics on November 13 at 08:30 a.m. Eastern Time. Forecasts published ahead of its release point to a 0.4% month-over-month increase in the headline index and a 0.3% rise in the core index. The Federal Reserve's schedule for the same day includes Vice Chair for Supervision Michelle Bowman's discussion of supervision and regulation at 10:50 a.m. The Bureau of Labor Statistics has scheduled the November Consumer Price Index report for December 10, 2026, at 8:30 a.m. Eastern Time. The bureau did not collect October 2025 survey data because of a lapse in appropriations, preventing the release of October 2025 figures for most CPI series. Producer data and upcoming central bank dates are among the next milestones after the market repriced the rate path in response to the October reading.