US Treasuries: Yields jump after CPI shock – Deutsche Bank

US core and headline CPI exceeded expectations, prompting a sharp sell-off in US Treasuries alongside hawkish remarks from Fed officials, according to Deutsche Bank strategists. As 10-year yields neared 5%, two-year yields recorded their largest daily rise since 2025. Markets are now pricing in a longer and more aggressive Fed rate-hiking cycle extending into 2027.

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"That US CPI print drove the biggest moves of the day, with the monthly core CPI print for October above consensus at +0.30% (vs. +0.2% expected)."

"Moreover, it was the third consecutive month with core CPI at +0.3%, and if you take those three months together, the annualised pace for core CPI is running at +3.75%."

"That’s the fastest pace on that measure since April 2024, so it made it increasingly difficult to dismiss this as a blip."

"Meanwhile, the headline CPI numbers were faster still, with monthly headline CPI at +0.35% (vs. +0.3% expected), with the 3-month annualised pace at +5.72%."

"For markets, the clearest impact could be seen in US Treasuries, with yields surging across the curve."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)