Fed rate hike expectations intensify as 10-year U.S. Treasury yield breaches 5%

On November 11, the U.S. released its October Consumer Price Index (CPI), which rose 0.4% month-on-month—higher than the widely expected 0.3%. On the same day, Federal Reserve Governor Christopher Waller delivered a hawkish speech, stating that if inflation runs significantly hotter than anticipated, the Fed may adopt more aggressive policy responses. These dual factors drove U.S. Treasury yields sharply higher across the curve: the 10-year yield climbed to 5.012%, while the 2-year yield rose to 4.759%. As a result, market pricing for the Fed’s December meeting quickly shifted—odds of a 25-basis-point rate hike jumped to 86%, while the probability of a 50-basis-point hike stood at 14%. European bond markets also came under pressure, with Germany’s 10-year Bund yield rising to 3.307%, its highest level since November 3.