Hot September CPI: Why An October Fed Rate Hike Is Now In Play

What happened: September CPI came in warmer than expected, with headline inflation rising 0.65% on the month and core CPI up 0.335%. Key numbers: Headline CPI 3.738% YoY. Core CPI 2.564% YoY. Energy costs up 5.2%. 2-year Treasury yield up 14bps. October 28 Fed rate hike seen as a 50/50 proposition. Why it matters: Inflation was broadly above estimates, and bond markets reacted sharply with a bear flattener developing. An October 28 Fed rate hike is now a 50/50 proposition as further inflation and retail sales data loom this week.

September CPI came in warmer than expected, with headline inflation rising 0.65% on the month and core CPI up 0.335%.

Inflation was broadly above estimates, and bond markets reacted sharply with a bear flattener developing. An October 28 Fed rate hike is now a 50/50 proposition as further inflation and retail sales data loom this week.