Wall Street falls and Treasury yields surge after hot inflation report

Wall Street fell and US Treasury yields surged after a higher-than-expected inflation report reinforced expectations that the Federal Reserve will raise interest rates in December, dampening Monday's optimism over Middle East war signals. Fed Governor Christopher Waller said in London he supported a rate hike even if inflation data came in lower than forecast, adding that a larger half-percentage-point increase could be justified. Following the CPI release, traders raised the probability of a 50-basis-point December hike to nearly 12%, according to CME's FedWatch tool. The 10-year Treasury yield rose 14.5 basis points to 5.009%, and the 2-year yield jumped 19.9 basis points to 4.746%, while the dollar index gained 0.7%. RSM US chief economist Joseph Brusuelas said the report shows oil and energy price increases are transferring to transport services and food, calling the underlying data persistent and rigid inflation that warrants a December hike. In stock moves, Intel fell 2.1%, Super Micro Computer dropped 2.8%, and Nebius slid 5.2%, while Advanced Micro Devices rose 1.3% on a $5 billion investment in Anthropic, and Broadcom gained 3.9%. Anthropic began formal promotion of its potential IPO, valued at $64.4 billion with shares priced between $70 and $78.