US Treasury yields surge as hot CPI revives Fed tightening bets

The US Treasury market had its sharpest selloff in months on Tuesday. A hot CPI print met hawkish Fed rhetoric, and the market reopened a question it thought was settled: how fast the Fed will tighten.

Bond market gets a hawkish jolt

The U.S. 2Y (US2YT) yield stood at 4.731% (+4.05%, about 18 basis points) as of 3:19 PM EST. It touched 4.763% intraday, near its 52-week high of 4.96%. Bloomberg said it was on pace for the biggest jump since the April 2025 tariff shock.

The U.S. 10Y (US10YT) yield is 4.99% (+2.61%) as of 3:27 PM EST, after a 5.023% high. The curve flattened as a result. The 2s10s gap is about 26 basis points. That is the arithmetic gap between the two yields above, not a quoted spread.

The trigger: inflation that won’t fade

October CPI rose 0.4% against a 0.3% forecast. Core CPI rose 0.3% against a 0.2% forecast, a third straight month at that pace. Annualized, that is about 3.7%, well above the Fed’s 2% target. Read more (Nov 10, 2026) Year-over-year comparisons were not published, because October 2025 survey data were not collected during the federal funding lapse. Read more (Nov 10, 2026)

Waller had set the bar hours earlier in London. He said he’d back a 25-basis-point hike in December even if inflation cooled, and that a core reading around 0.3% or higher could warrant a half-point move. The data met that threshold. Dallas Fed President Lorie Logan added that the Fed may need to move faster.

The wage backdrop. Friday’s jobs report showed unexpected wage growth and strong hiring. Tight labor and sticky prices are a combination the Fed typically treats as a reason to keep tightening.

What markets are pricing

• December: CME FedWatch shows about a 99% chance of a hike. The odds of a 50-basis-point move rose to nearly 11% from zero before the data. (Nov 10, 2026)
• By June: futures price about three quarter-point hikes, per Bloomberg.
• Policy rate: it stands at 3.75%–4%, per Deutsche Bank. A 2-year yield near 4.73% sits well above that range, so the market is pricing sustained tightening.
• The debate: Mizuho’s Alex Pelle says the argument will be 25 versus 50 basis points, not zero versus 25. Deutsche Bank sees 25 in December and another 25 in January, with 50 not its base case. (Nov 10, 2026)

The Fed has hiked only once under Chairman Kevin Warsh, by a quarter point in September, and held in October. He has also dropped forward guidance, so traders are leaning on data and on other officials’ remarks. That explains why one hawkish governor and one CPI print moved the front end so far. Mizuho calls December "some make up" for the skipped October move.

Weak demand at the long end

The 10-year auction on Tuesday priced at 5.02%, slightly above the prevailing trading level. That points to soft demand. The yield is rising on three fronts: Fed hike risk, debt supply and inflation. The 10-year remains well below its 52-week high of 5.365%, but that level is not far away. U.S. 10Y (US10YT) rising above 5.365%, its 52-week high would mark a new high for the cycle. Likewise, U.S. 2Y (US2YT) rising above 4.96%, its 52-week high would signal a more aggressive Fed path being priced.

The cross-asset fallout

Stocks. The S&P 500 is down modestly, but the damage is concentrated in rate-sensitive pockets. NVIDIA is down 5.58% a week before its Nov 17 earnings. Higher discount rates weigh hardest on long-duration growth stocks. DWS’s George Catrambone said tech "has taken notice and will continue to tighten financial conditions." Last week’s tech rout left sentiment fragile, and the VIX is at 19.76 (-0.80%).

Housing. The 10-year near 5% leaves mortgage costs under upward pressure. Homebuilders fell with it.

Currencies. The dollar firmed. EUR/USD is down 0.53% even as the ECB’s Joachim Nagel argues for a December hike. Fed hawkishness is outweighing it for now.

Oil. Brent has been sliding. Energy is no longer the main inflation driver, which makes the broad-based CPI core strength more worrying.

Bulls, bears, and next catalysts

• Bull case: the Fed is acting early, which could keep inflation expectations anchored. Oil near $92 is easing the energy shock, and a 50-basis-point move is not the base case at several banks.
• Bear case: a tail risk of a supersized hike, weak Treasury demand and fragile tech sentiment could feed each other. Bloomberg’s Tatiana Darie warned that further yield gains threaten renewed equity volatility.
• What to watch: PPI later this week, PCE later this month, NVIDIA earnings on Nov 17, and the Dec 8–9 FOMC meeting.

The bond rally since early October was built on falling oil and tech weakness, and Tuesday showed how quickly inflation data can undo it.