Wall Street Sees Rate Hike as Certain After Hot Inflation Data

Wall Street now expects a Federal Reserve rate hike next month after October inflation came in hotter than forecast and a top Fed official hinted at supporting a larger increase. Stocks fell and bond yields spiked in response. The October consumer price index rose 0.4%, above the 0.3% expected, though slower than September. Fed Governor Christopher Waller said a 50 basis point hike should be considered in December, warning that a smaller move would put credibility at risk. Traders now see nearly 90% odds of a quarter-point hike. The 10-year Treasury yield jumped 13 basis points to 4.99%, nearing the key 5% level, while the 2-year yield rose 19 basis points. The S&P 500 fell 0.7%, and the Dow dropped 314 points. Analysts said Waller's comments make a December hike a done deal, with persistent inflation weighing on risk assets.