Two-Year Treasury Yield Jumps 19 Basis Points as Fed Hike Bets Rise

The two-year U.S. Treasury yield climbed 19 basis points Tuesday to 4.75%, its largest one-day rise since April 2025, as markets priced in a faster Federal Reserve tightening path after October core inflation rose 0.3% for a third consecutive month.

Overall consumer prices increased 0.4% from September, slowing from a 0.6% rise the prior month as energy price gains eased. Core CPI, which excludes food and energy, rose 0.3%; auto insurance, public transportation and medical services all posted larger increases than expected.

Fed Gov. Waller said before the release that a core CPI increase of about 0.3% or more would lead him to consider a 50-basis-point increase at the December meeting. The October reading met that threshold, though a half-point move remained a minority view among Fed officials.

Rate futures pointed to quarter-point increases in December and January, with another increase possible in April. Before the shift, markets had placed the second increase in March. The implied chance of a 50-basis-point December hike briefly approached 15% Tuesday before easing to about 10%.

The move puts U.S. rates back in focus for crypto markets. The Fed’s Dec. 8-9 policy meeting will follow another round of jobs and inflation data.