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Follow your favorite stocksCREATE FREE ACCOUNTTraders work on the floor at the New York Stock Exchange (NYSE) in New York City, US, Nov. 4, 2026. Jeenah Moon | ReutersTreasury yields jumped on Tuesday after the U.S. consumer price index data for October came in hotter than expected. A mediocre auction of $42 billion in Treasury notes compounded the decline in bonds.
The yield on the 10-year Treasury note — the benchmark for mortgages, car loans and credit card rates — climbed 14 basis points to 5.00%. The 30-year Treasury bond yield, more sensitive to geopolitical developments, rose more than 11 basis points, to 5.37%. The 2-year Treasury note yield, which closely tracks short-term Fed rate expectations, surged 19 basis points, to 4.738%.
The 10-year yield last traded above the 5% level earlier this month. In October, 10-year and 30-year yields hit 24-year highs.
One basis point equals 0.01% or 1/100th of 1%, and yields and prices move inversely to one another.
The consumer price index for October grew 0.4%, more than the 0.3% expected from economists polled by Dow Jones and down from the 0.6% growth in September.
Core CPI, which excludes volatile food and energy prices, gained 0.3%. Economists had expected a 0.2% gain on the month. The reading was in line with September's 0.3% rise.
The report came after Fed Governor Christopher Waller said he would support "more robust action" if inflation readings are higher than expected.
"In that case, I believe a 50 basis point hike in the policy rate should be considered at the December meeting," Waller said in London at a central bank conference hosted by the Bank of England. "Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take."
Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, said the hot CPI numbers signal that Fed hikes could spill into 2027.
"The Fed could push for a more-aggressive tightening cycle with CPI continuing to print strong," she said. "A December hike is our firm base case despite wider AI jitters, and stubborn inflation means we cannot rule out further hikes in 2027."
A lackluster auction of 10-year Treasurys added further downward pressure on bond prices Tuesday. "Today's 10-year auction was a bit soft," BMO Capital economists wrote. "Before the auction, Treasuries were selling off on strong volumes, and 10-year notes went into the bidding deadline 12 bp cheaper on the day. Since the results, yields have ticked slightly higher in the follow-through."
"[D]ealers were left with 10% of the auction, the most since May," said Peter Boockvar, chief investment officer at One Point BFG Wealth Partners. "Inflation breakevens today are focused on the drop in oil prices while regular Treasuries today are reacting to a Fed that is definitely going to hike next month, as of now, with one another in January," he said.
Oil prices dipped further Tuesday morning, with Brent crude falling below $90 a barrel for the first time since August. This comes on the back of President Donald Trump's comments that the war with Iran could end "fairly soon" and downplaying the prospect of further strikes in the region.
Tuesday's CPI data, together with wholesale inflation numbers due Friday, may shape the Federal Reserve's future decisions on interest rates. Markets have largely priced in a quarter percentage point hike in December, according to the CME Group's FedWatch tool. Friday's stronger-than-expected U.S. employment data, more than double what economists had forecast, further strengthened those hawkish expectations.
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