Treasuries sold off, 2-year yield rises 19 basis points in a single day to 4.75%

AT A GLANCE

BlockBeats reports that US October core CPI exceeded expectations, rate hike expectations heated up, and the 2-year Treasury yield rose to 4.75% in a single day.

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⚡️Fed rate hike expectations surge sharply, hawkish signals strengthen, 2-year Treasury yield posts largest single-day gain since April 2025

BlockBeats news, November 11, U.S. October core CPI came in above expectations, and multiple Fed officials sent signals of further rate hikes. On Tuesday, U.S. Treasuries were sold off, with the 2-year Treasury yield rising 19 basis points in a single day to 4.75%, its largest one-day increase since April 2025, while the USD broadly strengthened against major currencies.

U.S. October headline CPI rose 0.4% month-over-month, down from 0.6% in September, mainly due to a slower increase in energy prices; core CPI excluding food and energy rose 0.3% month-over-month, maintaining that pace for a third straight month and above the 0.2% expected in a Reuters survey. Prices for auto insurance, public transportation, and medical services all rose more than expected.

Fed Governor Waller said before the data release that if monthly inflation improves, he would lean toward supporting a 25 basis point rate hike; if core CPI month-over-month growth again comes in around 0.3% or higher, then a 50 basis point hike at the December meeting should be considered. The subsequently released data reached the threshold he mentioned, but a one-time 50 basis point hike remains a minority view within the Fed.

Dallas Fed President Logan believes that under the current economic outlook, the Fed still needs to hike at least twice more, by 25 basis points each time, before pausing to assess the policy effects. She thinks the pace of hikes may need to accelerate, but she did not advocate a one-time 50 basis point hike in December. Kansas City Fed President Schmid believes the current target range of 3.75% to 4% is not restrictive enough for the economy; Fed Governor Bowman also noted that inflation pressures remain while the labor market is showing signs of strengthening.

Fed funds futures show the market is now mainly betting the Fed will hike by 25 basis points each in December and January 2027, and may hike again in April; previously the market mainly expected hikes in December and the following March. The implied probability of a 50 basis point hike in December briefly approached 15% on Tuesday before falling back to about 10%.

Omair Sharif, president of inflation research firm Inflation Insights, estimates that U.S. October core PCE price index may rise 0.34% month-over-month, or about 4% annualized, accelerating from the previous 1 month. Before the December 8 to 9 policy meeting, the Fed will receive another round of employment and inflation data.

Original link https://m.theblockbeats.info/flash/376658

Key points

According to reports, US October headline CPI rose 0.4% month-over-month, while core CPI rose 0.3% month-over-month, exceeding the Reuters survey expectation of 0.2%.
On the Tuesday mentioned in the report, the 2-year Treasury yield rose 19 basis points to 4.75%, the largest single-day gain since April 2025, while the USD strengthened broadly against major currencies.
Waller said before the data release that if core CPI month-over-month growth again reaches around 0.3% or higher, a 50 basis point hike should be considered in December; the report also notes this remains a minority view within the Fed.
Logan believes at least two more hikes of 25 basis points each are needed, but did not advocate for a one-time 50 basis point hike in December.
According to reports, fed funds futures mainly bet on 25 basis point hikes in December and January 2027; the implied probability of a 50 basis point hike in December briefly approached 15% before falling back to around 10%.
Omair Sharif estimates October core PCE may rise 0.34% month-over-month; before the December 8 to 9 policy meeting, the Fed will receive a new round of employment and inflation data.

AI-assisted interpretation

The following is analysis, separate from reported facts. Verify important claims independently.

The focus of the report is: headline CPI growth has slowed somewhat, but core CPI excluding food and energy remains above expectations. Multiple officials expressed inclination to continue hiking, and the timing of market-expected hikes has moved earlier. However, officials' views, futures market bets, and core PCE estimates are not yet implemented policy decisions or official data.

Why it matters to readers

The material also records changes in rate hike expectations, Treasury sell-offs, and USD strength, warranting attention to whether subsequent employment, inflation data, and policy meetings support current market bets.

When reading, distinguish between reported CPI data, officials' conditional statements, market-implied probabilities, and analysts' estimates; do not interpret "possible rate hike" as "rate hike already decided." The material does not provide synchronized performance of stocks or crypto assets.

Risks and unknowns

The material is media reporting and does not provide directly verifiable official data, original texts of officials' speeches, or raw futures records; related content has not been cross-verified.
The rate hike path for December and beyond is not yet determined; a 50 basis point hike is a minority view as described in the report, and implied probabilities have also changed.
The 0.34% month-over-month core PCE figure is Sharif's estimate, not an officially published value.

Treasuries sold off, 2-year yield rises 19 basis points in a single day to 4.75%

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