The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1559 ET - Treasury yields rise as sticky inflation raises the prospect of a steep interest rate increase by the Fed in December. October CPI comes in at a surprisingly high 0.4%, shortly after Fed's Waller said an oversized rate increase by half of a percent could be justified if prices keep misbehaving. The resulting repricing of expectations pushed the 10-year yield briefly above 5%. A 10-year auction in the middle of the selloff shows tepid demand. The 10-year yield settles at 4.982%, up 0.12 percentage point. The two-year has its highest daily increase since April 2025, rising 0.18 point to 4.725%. The WSJ Dollar Index rises 0.5%. (paulo.trevisani@wsj.com; @ptrevisani)
1530 ET - Gold futures give back yesterday's gains as an above-estimate U.S. consumer price inflation reading for October fueled a rise in yields and the dollar, and cemented expectations for a December interest-rate increase by the Fed. "When the market decides tighter policy is coming, gold is the first thing to reprice and it's repricing a Fed that is going to keep pushing until inflation is heading back to 2%," GivTrade technical analyst Waleed Said says in a note. "Policy has to get more restrictive before this is under control, and a hike on Dec. 9 is the starting point rather than the finish." Front month gold falls 2.1% in New York to $4,020.70 a troy ounce. Silver falls 2.8% to $51.101 a troy ounce. (anthony.harrup@wsj.com)
1042 ET - Gold futures lose ground after U.S. consumer price inflation for October comes in above estimates, pushing up yields and firming expectations for a Fed December interest-rate increase. Outflows from ETFs are a headwind for gold, while central bank demand remains a support, Thadeu Dos Santos of Infinox says in a note. "Lower oil prices could provide some offset. Crude has fallen to its lowest level since late August, which may ease inflation pressures and, over time, temper expectations of tighter monetary policy." Gold for December delivery is off 1.4% in New York at $4,058.40 a troy ounce. Silver is down 1.4% at $51.98 a troy ounce. (anthony.harrup@wsj.com)
1038 ET - The latest inflation readout shows price increases spreading across categories, reinforcing the likelihood that inflation will stay stick through 2027, Moody's Ratings Chief Credit Officer Atsi Sheth says in a note. That said, inflation isn't expected to surge far above current levels due to incoming rate hikes by the Federal Reserve and a more cautious consumer, Sheth says. Robust GDP figures and strong labor market data makes a December hike more likely and ups the potential for another hike in early 2027, she says. Credit markets should expect borrowing to remain costly next year, Sheth says. (dean.seal@wsj.com)
1035 ET - The latest inflation readout shows that at least part of the run-up in prices is demand-driven and can't be attributed wholesale to the war in the Middle East, even if some of the pressures are the result of supply constraints, LPL Financial's Jeffrey Roach says in a note. Higher airline fares haven't slowed the demand for flying, with the TSA's travel numbers still running above last year's levels despite rising costs, Roach says. The Labor Department's "food away from home" category is still running hot too, a sign that consumer demand for dining out remains strong, the economist says. (dean.seal@wsj.com)
1029 ET - Two measures of inflation that are critical to getting the topline figure back toward 2% moved the wrong direction in October, Glenmede's Jason Pride says in a note. The first is services less rent of shelter, which rose 0.5%, its firmest reading since May, Pride says. That extends the sticky services dynamic that has been a major obstacle to restraining price growth, he says. The measure needs to average out near 0.2% before it looks like inflation is heading back in the right direction, Pride says. The second is commodities less food, energy and used cars, which rose 0.4% in October, its firmest since January, he says. That strips out the most volatile components within goods, Pride says. (dean.seal@wsj.com)
1025 ET - U.S. home-sale prices declined in October, Redfin says. That ends a three-year streak of monthly year-over-year gains that held even as mortgage rates climbed and would-be buyers pulled back. The median home-sale price declined 0.4% to $388,634 in October. With the total number of homes for sale at its highest level since early 2020 and demand cooling, homebuyers' negotiating power keeps increasing--and that's finally showing up in sale prices. Home-sale prices fell nationwide, but they rose in more than half of the 50 most populous U.S. metro areas. U.S. pending home sales fell 3.6% largely because mortgage rates averaged 7.33%, a three-year high and up from 6.86% the month before. (chris.wack@wsj.com)
1024 ET - The details of the October inflation data are uglier than the topline figures suggest, Glenmede's Jason Pride says in a note. Energy inflation decelerated sharply to 0.7% after a 5.2% surge in September, meaning the price increases for October were more heavily driven by parts of the inflation basket, such as rent and healthcare, that the Federal Reserve can't overlook as one-off shocks, Pride says. Core inflation has been running at an annualized pace approaching 4% for the past three months, which is not the trajectory of an index that's moving toward the Fed's 2% inflation target, he says. (dean.seal@wsj.com)
1019 ET - October's hotter-than-expected inflation report raises a new question about whether or not the Federal Reserve will hike rates at both its December and January meetings, Northlight Asset Management's Chris Zaccarelli says in a note. A December hike is moving closer to a foregone conclusion, and is expected to be a quarter-point raise, though some are saying a half-point raise is on the table, Zaccarelli says. But before today, it would have been unexpected for the Fed to immediately follow that with a quarter-point hike in January, he says. The specter of back-to-back hikes is important for markets: a more patient Fed is easier for stock bulls to navigate, while a more aggressive Fed could become a major headwind next year, Zaccarelli says. (dean.seal@wsj.com)
1017 ET - October inflation keeps the Fed on track for a hike. "There is no downward momentum in inflation, and some key services categories have picked up modestly in recent months," AllianceBernstein's Eric Winograd writes. Monthly CPI comes in at 0.4%, versus consensus of 0.3%. The data follows stable labor indicators. "With growth and the labor market both steady, the Fed is free to focus on the inflation side of its mandate," Winograd says. On CME's FedWatch tool, bets on an outsized half-point interest rate increase in December are priced in at 15%, versus 85% for a regular quarter-point hike. (paulo.trevisani@wsj.com; @ptrevisani)
1005 ET - AI is expected to create more jobs than it eliminates, with a net positive balance of 1.7 million jobs globally forecast by 2030, Gartner says. The research and advisory firm projects there will be 10.6 million new jobs worldwide added thanks to AI, with 8.9 million jobs removed, leading to a net increase of 1.7 million by 2030 relative to a 2025 baseline. "AI job impacts are unevenly distributed across geographies, job functions and industries," Gartner's Helen Poitevin says. AI will have a greater proportional impact on the global technology workforce than in asset-intensive industries and the public sector, according to Gartner. More than a fifth of global workers will see their jobs transformed due to AI, Gartner says. (adria.calatayud@wsj.com)
1003 ET - A December rate hike by the Federal Reserve is effectively signed, sealed and delivered following the hot October core CPI reading, Franklin Templeton Institute's Jeff Schulze says in a note. That's particularly true after Governor Waller's notably hawkish remarks yesterday, Schulze says. Waller pointed out that hot inflation could justify a half-point rate hike, rather than just the quarter-point jump that the market had been pricing in. A steady labor market is giving the Fed ample flexibility to fight inflation that has been running above its 2% target for more than five years, Schulze says. Today's report showed continued stickiness from September, with core goods and shelter continuing to run above trend, he says.
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