Daily Financial Breakfast 11 November 2026: US Core CPI Rises 0.3% While WTI Recovers Above $85

Market News Today: Key Takeaways

• U.S. core consumer prices rose 0.3% in October for a third consecutive month, exceeding the 0.2% forecast as Federal Reserve officials discussed further rate increases.
• WTI crude recovered above $85 per barrel after two days of losses, with concerns about a lack of progress in Middle East peace negotiations emerging on Wednesday.
• ECB presidential candidate Klaas Knot told the Financial Times that he would not rule out a new, tailored policy instrument for a future crisis.
• Bundesbank President Joachim Nagel said it was “rather obvious” that the ECB needed to raise interest rates in December.
• ECB Chief Economist Philip Lane warned that underlying inflation could increase even if falling energy prices reduced headline inflation.
• Australian consumer confidence fell 2.7% to 78.2 amid Reserve Bank of Australia tightening.

Market Developments

U.S. Treasuries

U.S. two-year Treasury yields jumped 19 basis points on Tuesday, while 10-year yields rose 14 basis points and briefly moved above 5%, Rabobank said. Deutsche Bank described the two-year move as the largest daily increase since 2025.

Foreign Exchange

The U.S. Dollar Index traded around 102.20 during Wednesday's Asian session after gaining more than 0.5% on Tuesday. USD/JPY traded around 158.90 in Asia and subsequently extended its advance toward 160, while USD/CAD reached 1.4230 as the Canadian dollar fell to a four-week low. USD/CHF rose for a second consecutive day to around 0.8260 during early European trading. On Tuesday, AUD/USD fell 0.88% below 0.6900; GBP/USD dropped to just above 1.3300 before steadying near 1.3350. EUR/USD traded around 1.1190, down 0.28%, early in Tuesday's post-inflation trading, and extended its losses on Wednesday.

Gold

Gold recovered to around $4,050 on Wednesday after falling 2.67% on Tuesday following the U.S. inflation release and comments from Federal Reserve officials. During Tuesday's North American session, the metal had fallen toward $4,000.

U.S. Equities and Futures

The Nasdaq 100 fell to a session low just above 27,400 on Tuesday before recovering toward 27,750. During European hours on Wednesday, Nasdaq 100 futures rose 1.45% to around 28,230, S&P 500 futures advanced 0.60% to around 7,590, and Dow Jones futures gained 0.16% to around 52,400.

U.S. Inflation & Federal Reserve

U.S. Core CPI Exceeds Forecasts as Fed Officials Debate Further Tightening

U.S. consumer inflation exceeded expectations in October, with core CPI rising 0.3% month on month against a 0.2% forecast. It was the third consecutive monthly increase of 0.3%. Headline CPI rose 0.4%, compared with expectations of 0.3% and September's 0.6% increase.

Deutsche Bank cited a more precise headline monthly reading of 0.35% and a three-month annualised pace of 5.72%. Its strategists put the corresponding annualised core rate at 3.75%, the fastest since April 2024. Rabobank highlighted accelerating grocery and food inflation, persistent shelter costs and the delayed transmission of earlier energy shocks into medical care, household furnishings and other daily expenses.

Fed Governor Christopher Waller had called for a December increase of at least 25 basis points before the inflation release, Commerzbank said. He said a monthly core reading of 0.3% or higher warranted consideration of a 50-basis-point increase. Dallas Fed President Lorie Logan called for at least two additional 25-basis-point increases, saying policy was 50 basis points below a “modestly restrictive level” and that faster action this winter was possible.

Chicago Fed President Austan Goolsbee described the CPI report as “borderline disturbing” in a PBS Newshour interview. He singled out services inflation that was not coming down, said the labour market remained steady and stable, and warned about inflation becoming embedded in expectations. Fed Vice Chair for Supervision Michelle Bowman said inflation pressures were persisting while labour-market conditions appeared to be firming. Kansas City Fed President Jeffrey Schmid described monetary policy as “fairly accommodative”.

Philadelphia Fed President Anna Paulson supported further “gradual” increases and said policy needed to be “somewhat restrictive”. She described underlying inflation as stuck between 2.5% and 3%, but distinguished current conditions from circumstances requiring faster action. She said she would want to move more quickly if inflation expectations rose, wage pressures built or underlying inflation increased, adding: “Right now, that's not what I'm seeing.”

Futures pricing shifted toward a fully priced 25-basis-point December increase from the current 3.75%-4.00% federal funds target range. Deutsche Bank said the amount of tightening priced for December rose from 21.0 basis points on Monday to 27.7 basis points at Tuesday's close and 28.5 basis points on Wednesday morning, implying a 14% probability of a 50-basis-point move at that observation. BBH reported odds reaching as much as 15%, while a later Wednesday reading put the probability at 11.5%. Deutsche Bank also reported a 22.3-basis-point increase on Tuesday in the rate priced for the September 2027 meeting.

Energy & Middle East Diplomacy

WTI Recovers Above $85 as Middle East Peace Talks Remain Unresolved

West Texas Intermediate crude traded around $85.60 per barrel during Wednesday's Asian session, recovering after two days of losses. Prices had reached two-month lows before the rebound.

Earlier trading reflected hopes of easing tensions between the United States and Iran. By later Wednesday, concern about the lack of progress toward a Middle East peace agreement had emerged, with WTI holding above $85.

European Central Bank

Knot Says a Future Crisis Could Require a New ECB Policy Instrument

Klaas Knot, the Dutch candidate to succeed ECB President Christine Lagarde, told the Financial Times that he would not rule out developing another, more tailored instrument in a future crisis “of a different nature”.

“If circumstances require it, we will not hesitate to take action,” Knot said. His remarks concerned potential crisis support rather than a proposal for a specific new instrument or an announced policy decision.

Nagel Says December ECB Rate Increase Is “Rather Obvious”

Bundesbank President Joachim Nagel backed an ECB interest-rate increase in December in an interview with Bloomberg TV. “It is rather obvious that we have to increase in December,” said Nagel, who is also a member of the ECB Governing Council.

Lane Warns Lower Energy Prices Can Mask Underlying Inflation Pressure

ECB Chief Economist Philip Lane warned that lower energy prices would not necessarily mean an easing of underlying price pressures. Speaking at the Bank of England and its Watchers Conference, he said “it would be a surprise if there are no second-round effects”.

If energy prices edged lower, “headline inflation could fall while underlying inflation rises”, Lane said, distinguishing the direct contribution of energy costs from broader inflation developments.

Australian Economy

Australian Consumer Confidence Falls 2.7% to 78.2

Australian consumer confidence fell 2.7% to 78.2 amid Reserve Bank of Australia monetary tightening.

Upcoming Key Events

• Federal Reserve December Policy Meeting (9 December 2026): The U.S. Federal Open Market Committee's December interest-rate decision is scheduled for 9 December.