U.S. consumer prices rose more than expected in October as core inflation remained firm for a third consecutive month, stoking concerns that price pressures are broadening and sending short-term Treasury yields sharply higher, according to official data published Tuesday.
The consumer price index (CPI) rose 0.4 percent in October after climbing 0.6 percent in September, the U.S. Bureau of Labor Statistics reported, exceeding the 0.3 percent economists had expected.
The core index, which excludes food and energy, rose 0.3 percent, putting core inflation on an annualized pace of roughly 3.6 percent, well above the Federal Reserve's 2 percent target. Shelter costs also increased 0.3 percent, accounting for more than 30 percent of the overall monthly increase.
The report came after Fed Governor Christopher Waller spoke in London overnight, saying that if core prices rose 0.3 percent or more, "a stronger policy move may be needed," and that a 50-basis-point rate hike should be considered at the Fed's Dec. 8-9 meeting.
Bond markets sold off following the release of the CPI data. The two-year Treasury yield surged about 15 basis points to above 4.7 percent, marking its biggest single-day increase since early April 2025, while the 10-year yield climbed to about 4.93 percent.
Markets are now pricing in an almost certain rate hike in December, with the probability of a half-percentage-point increase rising to nearly 15 percent.
Christopher Hodge, chief U.S. economist at Natixis North America, said a third straight core inflation reading rounding to 0.3 percent is an "unacceptable pace for the Fed," and that with inflation remaining sticky rather than reaccelerating, "50bps is squarely on the table for the Fed in December."
"Even if markets are pricing 25 for December, if the November print is high, that could be a good time for a surprise jumbo hike," he said.
Meanwhile, James McCann, senior economist at Edward Jones, said the report most likely seals the deal on a hike to close the year, but a quarter-point increase remains the most likely outcome as oil prices ease.
U.S. core inflation stays sticky in October, boosting rate hike bets
Heads of international organizations on Tuesday hailed China's significant contributions to clean energy development, green and low-carbon transition and global climate governance, as the 31st United Nations Climate Change Conference (COP31) continued in the Turkish coastal city of Antalya.
Speaking at a side event titled "Ecological Civilization and Beautiful China Practices" at the China Pavilion, Simon Stiell, executive secretary of the United Nations Framework Convention on Climate Change (UNFCCC), said China has long been a staunch supporter of multilateralism, adding that its firm commitment to the UN cause, particularly the UN climate agenda, has helped change the world.
"China's South-South cooperation has also supported the transition to clean energy and climate resilience in many developing countries. Your energy transition is like nowhere else on Earth. I was privileged to witness this firsthand on my many visits to your beautiful country in the past few years. That has delivered jobs. It's delivered growth. It's delivered development and greater energy security at home," Stiell said.
International Energy Agency (IEA) Executive Director Fatih Birol was equally effusive about China's energy transition, saying the country's speed of innovation had left a deep impression on him. China has shown the world the way forward, and a growing number of countries are following, he noted.
"China, the country that is hosting us today -- they have already made major achievements here, in terms of electric cars, in terms of renewables, in terms of battery storage and others. And I can tell you that China's role in clean energy is undisputable -- both in solar, wind, battery storage and electric cars," he said.
China's Minister of Ecology and Environment Huang Runqiu told the same event that global climate governance now stands at a critical juncture, as the world moves from commitments to implementation.
He said China will always be a doer in climate action, firmly uphold multilateralism and the principle of common but differentiated responsibilities, and work with all parties to deepen climate governance cooperation and push for practical outcomes at COP31.
Int'l organization heads at COP31 praise China's clean energy contributions
