Hot October CPI Sends Fed Hike Odds to 96% and Rocks Markets from Crypto to Bonds

A hotter-than-expected US inflation reading for October 2026 sent shockwaves across global markets, dramatically repricing Federal Reserve rate expectations and triggering broad selling in risk assets. The Consumer Price Index rose 4.08% year over year in October, up from 3.72% in September, with the monthly gain coming in at 0.4% against a 0.3% forecast. Fed Governor Waller publicly backed a December rate hike, pushing the implied probability of a 25-basis-point increase to 96.3% from 76.3% before his remarks. Goldman Sachs went further, revising its Fed outlook to include an additional 25-basis-point hike in March 2027 and pushing its forecast for the first rate cut back three months to December 2027.

The Dollar Index climbed toward 102.50, reinforcing a bullish technical picture with analysts citing scope for a further advance toward 103-104. The 10-year US Treasury yield rebounded to 5%, and global bonds fell as markets priced in the possibility of a larger 50-basis-point move in December. EUR/USD hovered near 1.1166, GBP/USD struggled below the mid-1.3300s, and USD/JPY pushed toward 159, within striking distance of the 160 level where Japan has signaled intervention risk. The BoE's own hawkish posture offered some support for sterling, limiting deeper losses.

Gold fell 2.6% in the prior session before rebounding above $4,040 to $4,050 an ounce in Asian trading, with buyers cautious given elevated rate-hike expectations and thin Veterans Day liquidity in US and Canadian markets. The recovery held the psychologically significant $4,000 level, supported by safe-haven demand and central bank buying, with silver, platinum, and palladium also posting gains.

Crypto markets bore some of the sharpest damage. Bitcoin fell from above $81,000 the previous Wednesday to below $73,000 on November 10, its first drop to that level since the August breakout rally. More than $723 million in derivatives positions were liquidated in 24 hours. US spot Bitcoin ETFs recorded $95 million in outflows on November 10, the fourth consecutive day of losses, extending 2026 net outflows past $1 billion and erasing a year-to-date cushion of more than $1.4 billion built up over roughly three weeks. Options and prediction markets placed a roughly 31% probability on Bitcoin falling below $70,000 before Christmas. Zcash led large-cap losses, breaking below $1,000, while Ethereum tested key support near $2,000, a level analysts warned could drag Bitcoin toward $69,000 if breached. Bitcoin dominance climbed toward 61% as capital rotated away from altcoins.

Equities closed lower Tuesday, with the S&P 500 down 0.38%, the Dow Jones Industrial Average off 0.30%, and the Nasdaq 100 declining 0.60%. In Wednesday pre-market trading, Nvidia gained about 2.48%, AMD climbed more than 5%, and Intel advanced over 4%, lifted by stronger-than-expected results from CoreWeave that revived confidence in AI spending despite the inflation backdrop.