Fed December rate-hike bets surge after hot October CPI
The market is pricing an 87.3% chance of a 25-basis-point Fed rate hike in December after a hot October CPI, and Dallas Fed President Lorie Logan says at least two more hikes may be warranted.
Rate-hike bets surge
U.S. consumer inflation stayed elevated in October, with the Consumer Price Index rising 0.4% month over month, down from 0.6% in September. Core CPI, which excludes food and energy, increased 0.3%, matching the September pace. Both readings beat forecasts, and annual rates were not reported because comparable October 2025 data was missing after the government shutdown.
The market is now pricing a 25-basis-point rate hike at the Fed's December meeting at 87.3%, according to CME FedWatch. Dallas Fed President Lorie Logan said the Fed may warrant at least two more 25-basis-point rate hikes.
- December hike odds (CME FedWatch)87.3% for a 25-basis-point rise
- October CPI (monthly)up 0.4%, above forecasts
- October core CPI (monthly)up 0.3%, above forecasts
- S&P 500 on Tuesdaydown 0.4% to 7,520.93
- Nasdaq on Tuesdaydown 0.7% to 25,065.87
- Dow on Tuesdaydown 0.3% to 52,231.89
Wall Street falls after the print
The Dow Jones Industrial Average fell 0.3%, or 157.86 points, to close at 52,231.89. The tech-heavy Nasdaq Composite declined 0.7% to close at 25,065.87. The S&P 500 lost 0.4% to end at 7,520.93; of its 11 sectors, six ended in negative territory while five ended in positive territory.
The fear gauge, the CBOE Volatility Index (VIX), decreased by 2.3% to 19.46. A total of 17.08 billion shares were traded on Tuesday, lower than the last 20-session average of 18.83 billion. The S&P 500 posted seven new 52-week highs and three new lows, and the Nasdaq Composite recorded 59 new highs and 238 new lows.
What to watch next
The inflation reading and hawkish Fed comments put the focus back on the December meeting. Investors will watch upcoming data — including October PPI, due November 13 — and any signals from Fed officials about how many more hikes they think are needed.
The same day, the New York Fed reported credit card debt hit a record $1.29 trillion. With most card rates tracking the Fed's rate, another hike would make carrying balances more expensive still.
This post summarizes reported facts and our view of the risks involved. It is not a forecast and not investment advice.
