US Inflation Surge Sparks Bond Selloff as Fed Official Floats Larger Rate Hike

BERLIN, Nov 10 (OPA) — The latest US inflation figures are increasing pressure on monetary policymakers led by Fed chief Kevin Warsh to deliver an aggressive rate hike during their December gathering. Tuesday's data prompted a sharp selloff across the fixed-income market. The yield on two-year Treasury notes climbed as high as 4.76 percent, reaching its highest level in more than two years. Bond yields move inversely to prices.

Data released Tuesday by the US Labor Department showed the consumer price index rose 0.4 percent in October from the previous month, outpacing the 0.3 percent increase economists had anticipated. The core inflation rate, which excludes volatile food and energy costs, remained steady at 0.3 percent. That reading also surpassed the consensus forecast of 0.2 percent.

Following the persistent price pressures, debate within the Fed's leadership has intensified regarding whether a standard 25-basis-point increase will suffice. Fed Governor Christopher Waller stated ahead of the data release that a 50-basis-point rate adjustment in December must remain on the table.

Speaking at a conference in London on Tuesday, Waller emphasized the necessity of decisive monetary tightening. "Raising rates by just 25 basis points would jeopardize our credibility, and that is a risk I am not willing to take," he said. This stark warning has amplified uncertainty across global financial markets.