“The Fed could push for a more-aggressive tightening cycle with CPI continuing to print strong,” said Lindsay Rosner at Goldman Sachs Asset Management.
Global markets face renewed volatility as hotter inflation readings and hawkish signals from central bank officials drive aggressive interest rate bets across Asian stocks and bonds. Asian stocks and bonds fell sharply following the US inflation data, while South Korea’s Kospi jumped 6.6% following SK Hynix’s leap. Equity-index futures for South Korea, Japan, Hong Kong and Australia pointed to losses, and the Nikkei dropped 1.3% while down 5% for the week.
AI stocks got a boost after South Korea’s SK Hynix soared 10.9% in Seoul following its latest profit report. Taiwan’s stock market was closed due to a typhoon, and an index of mainland Chinese blue chips lost 1.1% to hit its lowest level since July 2025, sitting down about 20% from its late June peak.
Consumer prices excluding food and energy climbed 0.3% in October from the previous month, according to Bureau of Labor Statistics data, topping estimates for a third straight month. Overall consumer prices jumped 0.4% as essential costs climbed across the board. The hotter-than-expected data triggered a sharp selloff in Treasuries, particularly hitting rate-sensitive short-dated bonds.
Two-year Treasury yields jumped 17 basis points to 4.73%, recording their largest move in 19 months. Money markets subsequently priced in a quarter-point interest rate raise by the Federal Reserve at its meeting next month, alongside a 10% risk of a larger 50-basis-point move. Futures data further indicated that traders are baking in approximately three quarter-point increases by June.
A December hike is our firm base case despite wider AI jitters, and stubborn inflation means we cannot rule out further hikes in 2027.
Lindsay Rosner, Goldman Sachs Asset Management
The inflation data brought immediate hawkish commentary from policymakers. Those remarks followed earlier comments from Governor Christopher Waller indicating that a jumbo 50-basis-point hike in December could be warranted.
Earlier coverage: S&P 500 Futures Rise as Traders Await Consumer Inflation Report
