The dollar index climbed to 102.9 Wednesday, its strongest level in 19 months. October inflation came in hotter than expected for the third straight month, with consumer prices rising 0.4% in October and core inflation up 0.3%. That has turned the Fed rate-cut trade on its head. Christopher Waller says a half-point increase in December deserves consideration, while Dallas Fed President Lorie Logan has discussed two more quarter-point hikes, in December and January. Traders are now pricing in a December increase, with some betting on the larger move.
The bond market took the hit first. The two-year Treasury yield jumped nearly 19 basis points Tuesday to 4.73%, its biggest one-day move since April 2025. The 10-year yield pushed close to 5%. Gold fell 2.6%, the euro dropped to its weakest level since May 2025, and the yen slid toward 160 per dollar, a level that could bring renewed Japanese intervention concerns. A stronger dollar also makes life harder for countries and companies that borrow in dollars or import energy priced in dollars. The Fed is dealing with inflation at home, but its rate decisions are tightening financial conditions well beyond the United States.
https://www.reuters.com/world/china/global-markets-wrapup-1-2026-11-10/
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