13 November 2026: US government bond yields jumped this week after October’s inflation report came in hotter than expected, convincing traders that the Federal Reserve will raise interest rates again in December, and sparking debate about whether it could move by a larger half-point.
Key points:
- October CPI rose 0.4% month on month, above the 0.3% forecast; core CPI rose 0.3% against a 0.2% forecast.
- The 2-year Treasury yield jumped about 18 basis points to around 4.74%, its biggest one-day rise since April 2025.
- The 10-year yield rose about 10 basis points and briefly traded above 5%.
- Futures pricing moved to show a December rate hike as close to certain, with some chance of a 0.5% move.
What the CPI report showed
Released on 10 November, the Consumer Price Index rose 0.4% in October, slower than September’s 0.6% jump but faster than economists expected. Core prices, which exclude food and energy, rose 0.3% for the third month in a row. Because of data gaps from the 2025 government shutdown, the Bureau of Labor Statistics did not publish an official 12-month inflation rate for October; Bank of America estimates the annual rate at roughly 3.8% for headline and 2.7% for core. Read our October CPI preview for the background.
Why yields jumped
Before the data, Fed Governor Christopher Waller had said he was leaning towards a quarter-point hike in December, and that a half-point move should be considered if core inflation came in at around 0.3% or higher. The report hit that threshold. Traders quickly priced in a higher path for interest rates, and short-term yields, which track Fed expectations most closely, rose the most.
| Measure | Move after the CPI report |
| 2-year Treasury yield | Up about 18 bp to ~4.74% (biggest one-day rise since April 2025) |
| 10-year Treasury yield | Up about 10 bp to ~4.98%, briefly above 5% |
| December Fed hike odds (CME FedWatch) | From about 72% a week earlier to between 89% and nearly 100% |
Exact levels varied during the day and between data sources, so the figures above are approximate.
Why a 5% 10-year yield matters
- Borrowing costs: the 10-year yield influences mortgage rates and corporate borrowing worldwide.
- Stocks: higher yields make bonds more attractive compared with shares and can weigh on growth stocks.
- The dollar: higher US yields have pushed the dollar to a 19-month high. See our forex report.
- Gold: rising yields increase the cost of holding gold, which pays no interest.
For a practical look at what this means for savers and borrowers, read what a 5% Treasury yield means for you.
What to watch next
- The Fed’s 8–9 December meeting and whether it raises rates by 0.25% or 0.5%.
- Speeches by Fed officials in the coming weeks.
- November jobs and inflation data, due in early December.
Risk warning: Bond prices fall when yields rise, and the value of investments can go down as well as up. Trading bond, forex or index CFDs with leverage carries a high risk of rapid losses. This article is for information only and is not investment advice.
Sources
- Marketplace: Broad inflation persists, October CPI shows
- CNN: Bond yields surge most in 19 months
- CNBC: Fed may need a supersized hike in December
- Investing.com: December hike odds after hot CPI
- Yahoo Finance: A jumbo rate hike debate is brewing
- US Bureau of Labor Statistics: CPI
Abdullah Munir