US Treasuries sank on Tuesday and traders firmed bets on a December Fed hike after a hotter-than-expected October CPI, according to Bloomberg/CNBC reports. Headline prices rose 0.4% from September, above the 0.3% consensus; core CPI (ex food and energy) climbed 0.3%.

The two-year yield, most sensitive to Fed policy, jumped as much as 18 basis points toward 4.74% — on pace for the biggest one-day move since April 2025. The 10-year benchmark briefly traded above 5% before easing.

Markets began pricing a small chance of a half-point December move alongside a base case of +25 bp, and at least two hikes by mid-2027. Fed Governor Christopher Waller had said in London he would support “more robust action” and consider +50 bp if inflation kept accelerating, otherwise “credibility [is] at risk.”

A soft $42 billion 10-year auction added pressure on bond prices. The data followed a labour report with solid hiring and an unexpected jump in wages, reinforcing hawkish expectations after October’s hold.

Economists including PIMCO’s Tiffany Wilding said “50 bp is on the table for discussion” after Waller’s remarks. BLS did not publish full year-over-year changes because data collection was interrupted in last October’s shutdown.

The Treasury selloff also hit equities at the open, as some strategists argued the Fed may need “a bigger hose” against inflation, CNBC reported.

Image: Treasury Building, Washington (Wikimedia Commons, CC BY-SA 3.0).

Sources consulted: Treasuries slide as hot US inflation cements December rate bets — Bloomberg.