Global Bonds Tumble as US Inflation Sparks Rate Hike Fears
Global bonds fell and the US dollar rose after October core inflation hit 0.3 percent, raising expectations for a 50-basis-point Federal Reserve rate hike in December.
Global bond markets tumbled and the U.S. dollar strengthened after October core inflation reached 0.3 percent, exceeding the 0.2 percent forecast. The data increased market concerns that the Federal Reserve System may implement a 50-basis-point interest rate hike in December.
Federal Reserve Governor Christopher Waller stated that a 0.3 percent core reading would prompt him to consider such a move. Other officials offered varying perspectives, with Dallas President Lorie Logan calling for two additional rate rises and Chicago President Austan Goolsbee warning of a "real inflation issue."
Market volatility manifested in a surge of two-year Treasury yields and sell-offs in Asian bonds. While the U.S. dollar gained 0.5 percent, gold prices dropped 2.6 percent. Asia-Pacific equity markets remained largely resilient, though specific companies faced declines. SoftBank Group shares fell 3.3 percent following a $7 billion second-quarter net loss, and Nvidia shares slid 5.5 percent as the company investigates whether CEO Jensen Huang was targeted by a foreign intelligence operation.
