US inflation triggers a sharp repricing of Fed expectations. October CPI surprised to the upside, with headline inflation rising 0.4% month-on-month and core inflation increasing 0.3%. Markets fully priced in a 25bp Fed rate hike in December, while assigning some probability to a larger move. Against this backdrop, the 2-year Treasury registered its largest daily increase since April 2025.
US equities declined, as the rise in sovereign yields following the inflation release weighed on risk sentiment. The dollar strengthened by 0.6%, while gold fell 2.6% to around $4,030/oz.
Oil prices remain under pressure amid signs of de-escalation in the Middle East. Brent crude fell below $90/bbl during the session, for the first time since August, as expectations of a diplomatic resolution to the US-Iran conflict increased and concerns over potential supply disruptions eased. Meanwhile, TTF gas prices rose further, reflecting continued concerns over tight supply conditions ahead of the European winter heating season.
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