Global markets mixed as hotter-than-expected US inflation fuels hawkish expectations
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MENAFNThe prospect of borrowing costs staying elevated for an extended period weighed on investor confidence and reduced appetite for riskier assets.
US consumer prices, measured by the Consumer Price Index (CPI), increased 0.4% month-on-month in October, exceeding forecasts of 0.3%. However, the rise was slower than September's 0.6% increase. Annual inflation figures were not published.
Core CPI, which excludes food and energy prices, climbed 0.3% from the previous month, surpassing the expected 0.2% increase while matching September's reading.
The CPI tracks changes in the prices paid by urban households for a defined selection of goods and services, making it one of the key measures used to assess inflation.
Before the inflation data was released, Federal Reserve board member Christopher Waller expressed support for another interest rate increase in a speech.
Fed officials indicated that at least two additional rate increases of 25 basis points could be necessary, although they stressed that the timing and pace would depend on near-term economic and financial developments.
Markets had previously assigned an 87% probability to a 25-basis-point increase in December. However, recent remarks by regional Fed presidents have strengthened expectations of a larger 50-basis-point move.
US Treasury yields across the 10-year, five-year and two-year maturities advanced on Tuesday. Trading in the US Treasury market was suspended Wednesday in observance of Veterans Day.
The US dollar index gained 0.2% on Tuesday to reach 102.2 before remaining largely unchanged on Wednesday.
Gold prices moved in the opposite direction, falling 2.7% on Tuesday to $4,031 per ounce before recovering 0.6% to $4,054 on Wednesday.
Separately, Qatar said progress was being made toward resolving the crisis between the United States and Iran.
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