October CPI: Core Inflation Hits the Line, Turning a 50-Basis-Point Hike in December from an Outside Chance into a Real Option
October CPI rose 0.4% month over month, versus 0.3% expected; core CPI rose 0.3%, versus 0.2% expected, marking three straight months at 0.3%; supercore rose 0.4%.
Waller laid out the conditions plainly during the day: if core inflation is around 0.3% or higher, a 50-basis-point hike should be considered. Tonight’s reading landed right on the line. Damn frustrating—crude has already fallen to $85, and we still get this. Just speechless.
On Polymarket, before Waller’s remarks, the odds for the December meeting were about 78.5% for a 25-basis-point hike, 19.5% for no change, and under 1% for a 50-basis-point hike. Before CPI, the odds of a 25-basis-point hike rose to 87.5%, while those for a 50-basis-point hike were about 4%. After CPI, the odds were about 84.5% for a 25-basis-point hike, 11% for a 50-basis-point hike, and 2.5% for no change. Kalshi showed a similar move: the odds of a 25-basis-point hike fell from 88% to 82%, those for a hike of more than 25 basis points rose from 5% to 12%, and those for no change fell from 8% to 4%. The odds of a cumulative 75 basis points of rate hikes in 2026 (that is, a 50-basis-point hike in December) are about 9%.
Oil prices are pricing in a ceasefire. $WTI $CL fell below $85, down about 19% from its October 30 high. CNBC reports that Brent fell below $90, despite the Strait of Hormuz blockade remaining in place. Lower oil prices can bring down the energy component, but not core inflation.
The 2-year Treasury yield rose about 16 basis points to 4.70%, the dollar index was around 102, gold $XAU fell 2.4%, and Nasdaq futures dropped about 1.5%. BTC fell to $73,588, an 11-week low. Spot ETFs saw net outflows of about $1.48 billion over the first six trading days of November, and publicly listed companies have sold about 108,000 coins this year.
The December 9 rate decision comes before November CPI on December 10. Friday’s PPI is the next variable to watch.
1. A 25-basis-point hike (about 82% to 85%): If PPI is mild and oil prices keep falling, the 2-year yield could return below 4.6%, giving growth stocks and BTC some breathing room.
2. A 50-basis-point hike (about 11% to 12%): PPI comes in hot, or more officials echo Waller. Can the 2-year yield hold above 4.7%? For BTC, watch $73,000.
3. No change (2.5% to 4%): This would take a sharp deterioration in the stock market or credit spreads.
Oil prices keep heading lower, but core inflation has stayed at 0.3% for three straight months. That suggests inflation has spread from energy to core prices, and cooling oil prices can’t pull it back down. So there’s little suspense left over whether the Fed will hike in December; the only question is by how much.
October CPI rose 0.4% month over month, versus 0.3% expected; core CPI rose 0.3%, versus 0.2% expected, marking three straight months at 0.3%; supercore rose 0.4%.
Waller laid out the conditions plainly during the day: if core inflation is around 0.3% or higher, a 50-basis-point hike should be considered. Tonight’s reading landed right on the line. Damn frustrating—crude has already fallen to $85, and we still get this. Just speechless.
On Polymarket, before Waller’s remarks, the odds for the December meeting were about 78.5% for a 25-basis-point hike, 19.5% for no change, and under 1% for a 50-basis-point hike. Before CPI, the odds of a 25-basis-point hike rose to 87.5%, while those for a 50-basis-point hike were about 4%. After CPI, the odds were about 84.5% for a 25-basis-point hike, 11% for a 50-basis-point hike, and 2.5% for no change. Kalshi showed a similar move: the odds of a 25-basis-point hike fell from 88% to 82%, those for a hike of more than 25 basis points rose from 5% to 12%, and those for no change fell from 8% to 4%. The odds of a cumulative 75 basis points of rate hikes in 2026 (that is, a 50-basis-point hike in December) are about 9%.
Oil prices are pricing in a ceasefire. $WTI $CL fell below $85, down about 19% from its October 30 high. CNBC reports that Brent fell below $90, despite the Strait of Hormuz blockade remaining in place. Lower oil prices can bring down the energy component, but not core inflation.
The 2-year Treasury yield rose about 16 basis points to 4.70%, the dollar index was around 102, gold $XAU fell 2.4%, and Nasdaq futures dropped about 1.5%. BTC fell to $73,588, an 11-week low. Spot ETFs saw net outflows of about $1.48 billion over the first six trading days of November, and publicly listed companies have sold about 108,000 coins this year.
The December 9 rate decision comes before November CPI on December 10. Friday’s PPI is the next variable to watch.
1. A 25-basis-point hike (about 82% to 85%): If PPI is mild and oil prices keep falling, the 2-year yield could return below 4.6%, giving growth stocks and BTC some breathing room.
2. A 50-basis-point hike (about 11% to 12%): PPI comes in hot, or more officials echo Waller. Can the 2-year yield hold above 4.7%? For BTC, watch $73,000.
3. No change (2.5% to 4%): This would take a sharp deterioration in the stock market or credit spreads.
Oil prices keep heading lower, but core inflation has stayed at 0.3% for three straight months. That suggests inflation has spread from energy to core prices, and cooling oil prices can’t pull it back down. So there’s little suspense left over whether the Fed will hike in December; the only question is by how much.
