U.S. October seasonally adjusted CPI came in at 0.4% month-over-month, above market expectations. U.S. October seasonally adjusted core CPI came in at 0.3% month-over-month, also above expectations.

BLS did not publish YoY figures because data collection was interrupted during last October’s government shutdown. This is the final CPI ahead of the Fed’s Dec. 8-9 meeting and should keep pressure on policy; investors price a rate increase at that meeting.

Before the release, Fed Governor Waller said a core CPI print of +0.3% or higher could justify a 50bp hike. The report cites the Iran war, tariffs and a data-center boom among this year’s inflation drivers and shows rising price pressures ahead of midterm elections, where Democrats emphasized cost-of-living and regained control of both congressional chambers.

After the CPI release, markets further increased bets that the Fed will raise rates at least twice before mid-2027.

TIMIRAOS: US October core CPI rose 0.296% MoM, the third consecutive month around 0.3%. The annualized three-month core CPI increase is 3.75%, versus 1.6% in July.

Analyst Ira Jersey said today's CPI print was broadly above expectations, reviving the possibility of a 50bp Fed hike in December flagged by Fed Governor Waller and prompting a rapid bear‑flattening move. Jersey expects the yield curve to continue flattening until the Fed stops hiking. If the Fed does raise 50bp in December, he sees a high probability of another hike in March next year.

After the CPI data was released, U.S. stock index futures plunged, with Nasdaq futures falling more than 1%. Treasury yields jumped, with U.S. 2- to 5-year Treasury yields rising at least 10 basis points on the day.