U.S. Treasury Yields Rise After October Inflation, Prompting Markets to Reprice Rates
Key Facts
Short-term U.S. Treasury yields rose after the inflation data, as markets repriced the rate path toward greater tightening, according to a Reuters report published on November 12. Treasury Department data showed the two-year yield reached 4.86% that day, compared with 4.73% on November 10. That level refers to the November 12 session; a reliable yield figure for the November 13 session could not be verified. Reuters said strong inflation data drove a sharp rise in short-term yields. U.S. central bank officials kept open the possibility of a 50-basis-point increase amid concerns that inflation would persist.
The consumer price index rose 0.4% month over month in October, after a 0.6% increase in September, according to the U.S. Bureau of Labor Statistics. The core index, which excludes food and energy, rose 0.3% in October, the same rate recorded in September and August. These readings formed the backdrop to a repricing of monetary policy expectations, with Reuters saying strong inflation data led investors to adopt a more hawkish rate path. The 10-year yield also rose to 5.10% on November 12, compared with 4.98% on November 10, according to Treasury Department data. The move thus extended to longer maturities, alongside the rise in short-term yields.
The dollar traded near its highest levels in about 19 months during the November 12 session before easing slightly, according to Reuters. Its index reached 102.88 points, up 0.03%, after touching 103.08 points, its highest level since April 2025. The pricing screen accompanying Reuters' report showed silver futures at $50.133 an ounce, up 0.13% at the time prices were displayed. This was an intraday reading in that day's report, not a confirmed close or a price for the November 13 session. In producer markets, the producer price index for final demand rose 1.3% in September, with final goods prices up 2.6% and final services prices up 0.8%, according to the Bureau of Labor Statistics.
Reuters said some brokerage firms, including Goldman Sachs, now expect an additional rate increase early next year, alongside an increase in December. Reuters quoted Tiffany Wilding, an economist at PIMCO, as saying short-term inflation risks could justify rate hikes at the December and January meetings, with another increase possible in March. Wilding added: "Even if the Federal Reserve decides to raise rates by 25 basis points at its next meeting, the risk of near-term inflation persistence supports hikes at the December and January meetings, with another increase possible in March." Reuters said Federal Reserve Governor Christopher Waller had planned to support a quarter-percentage-point increase at the December meeting unless core inflation reached 0.3% or more. These remarks show that upcoming price readings will be pivotal in assessing the rate path.
The Bureau of Labor Statistics was unable to publish year-over-year changes for October 2026 for some consumer price indexes after it could not collect October 2025 survey data because of a lapse in appropriations. The bureau said it had not published October 2025 indexes for most series, making it impossible to calculate the 12-month change in October 2026 for series lacking those data. In the near term, the Bureau of Labor Statistics had scheduled the October producer price index release for 8:30 a.m. Eastern time on November 13. The Federal Reserve's next Federal Open Market Committee meeting is scheduled for December 8 and 9, 2026. Reuters said Waller tied his position on a December increase to the core inflation reading, while the report noted that some brokerage firms expect another increase early next year.