Hot Inflation Sends Treasury Yields Soaring as Investors Run for Defensive Stocks
Two-year yields jumped the most since 2024 after October prices topped forecasts, while CoreWeave's strong outlook gave the AI trade a lift.
By JAKE MORRISONMarkets & Investing · Nov 11, 7:00 AM
NEW YORK — Wall Street is bracing for a tougher Federal Reserve after October's inflation report came in hotter than expected.
Consumer prices rose more than economists expected in October, CBS News reported. Two-year Treasury yields posted their biggest jump since 2024 as traders bet the Fed may raise rates rather than cut them, the Financial Times reported.
The two-year Treasury is the market's best guess about where the Fed is headed over the next couple of years. When it jumps, it means investors expect borrowing costs to stay higher, or even rise. That ripples into everything from mortgage rates to car loans to what companies pay to borrow money for new factories and hiring.
Overseas, the reaction was mixed. Asian stocks diverged Wednesday as renewed optimism about artificial intelligence was offset by the forecast-beating U.S. inflation numbers and the prospect of a large interest rate hike next month, Euronews reported. Asian shares mostly rose on demand for AI chips even after Wall Street's retreat, The Independent reported.
Investors have been shifting out of high-flying technology names and into defensive sectors such as utilities, health care and consumer staples as markets enter what CNBC called a "state of alert". Defensive stocks tend to…