Wall Street Reacts to Hot October CPI as Fed Rate Hike Bets Intensify

Wall Street focused on the October US consumer price index report, which came in higher than expected, leading traders to nearly fully price in a quarter-point rate hike in December and consider a larger half-point increase. The overall CPI rose 0.4% month-over-month in October, exceeding the 0.3% forecast, while core CPI held at 0.3%, also above expectations. Federal Reserve Governor Christopher Waller said he would support a 25-basis-point hike in December, but a 50-basis-point move should be considered if price pressures remain strong. The data follows a strong jobs report, and the probability of a 50-basis-point hike rose to nearly 11% from zero, according to the CME FedWatch tool. Wall Street opened lower, with the S&P 500 falling 0.7%, while the two-year Treasury yield jumped 20.1 basis points to 4.748%.