The US 2 year Treasury yield climbed 20 basis points to 4.77%, heading for its largest single day jump since 2024, while the 10 year yield touched 5% as bonds extended their selloff after October’s consumer price report. Following the inflation data, Goldman Sachs raised its estimate for the October core PCE price index, the Federal Reserve’s preferred inflation gauge, to a 0.35% monthly increase from a prior forecast of 0.23%, corresponding to a 3.30% annual rate.

The move built on an earlier surge in yields after the Bureau of Labor Statistics reported October headline CPI rose 0.4% and core CPI gained 0.3% for a third straight month, both 0.1 percentage point above consensus estimates. The agency omitted official 12 month inflation figures because the 2025 government shutdown prevented price collection in October 2025, though Bloomberg estimates that backfill the missing data put annual headline inflation at 4.02%, up from 3.74% in September.

The 0.3% monthly core reading matched the threshold Fed Governor Christopher Waller set earlier Tuesday for considering a 50 basis point rate increase at the Dec 8 to Dec 9 policy meeting. CME FedWatch pricing showed traders eliminating the odds of a rate hold, assigning an 87.3% probability to a 25 basis point hike and a 12.7% chance to a 50 basis point move. White House National Economic Council Director Kevin Hassett called the report “disappointing” on Fox Business, saying “the trickle down from the high energy prices is definitely very palpable in the data.”