Global bonds slide as hot US inflation revives jumbo Fed hike bets
Global bonds fell and the dollar strengthened after a hotter-than-expected US inflation report and hawkish Federal Reserve comments raised the possibility of a half-point rate hike in December, though stocks showed resilience. Core US inflation ran at 0.3% monthly in October, above the 0.2% forecast, prompting Fed Governor Christopher Waller to signal he would consider a 50-basis-point hike. Fed funds futures now price a quarter-point move as nearly certain, with a 10% chance of a larger increase. Two-year Treasury yields surged 18 basis points overnight, and Asian bonds sold off. Gold dropped 2.6% to $4,030 an ounce, while oil rebounded on hopes the Iran war would be resolved after the Democrats' midterm election victory.