Daily Financial Breakfast 11 November 2026: US Core CPI Posts 0.3% Increase as WTI Returns Above $85

Today's Market News: Inflation Beats Forecasts as Rate Rises Stay in Focus

• An October increase of 0.3% in U.S. core consumer prices, rather than the forecast 0.2%, marked a third successive month at that pace. Federal Reserve officials continued to weigh additional rate rises.
• Following two sessions of declines, WTI crude regained ground above $85 per barrel. By Wednesday, a lack of progress in Middle East peace negotiations was giving rise to concern.
• In comments to the Financial Times, ECB presidential candidate Klaas Knot kept open the possibility of a new policy instrument tailored to a future crisis.
• The need for the ECB to increase interest rates in December was “rather obvious”, Bundesbank President Joachim Nagel said.
• Falling energy prices might lower headline inflation yet leave underlying inflation rising, according to a warning from ECB Chief Economist Philip Lane.
• With the Reserve Bank of Australia tightening policy, Australian consumer confidence dropped 2.7% to 78.2.

Markets Respond to Inflation and Policy Signals

U.S. Treasury Yields Rise Sharply

Rabobank recorded increases in U.S. Treasury yields on Tuesday of 19 basis points for the two-year maturity and 14 basis points for the 10-year, with the latter briefly surpassing 5%. The daily rise in two-year yields was unmatched since 2025, Deutsche Bank said.

Dollar Extends Gains Across Currency Markets

Having risen more than 0.5% on Tuesday, the U.S. Dollar Index held around 102.20 in Asian trading on Wednesday. USD/JPY's advance towards 160 followed a level of around 158.90 in Asia; meanwhile, a four-week low for the Canadian dollar accompanied USD/CAD's rise to 1.4230. Early in the European session, USD/CHF reached around 0.8260, extending gains for a second successive day. Tuesday's 0.88% fall took AUD/USD below 0.6900, while a retreat in GBP/USD to just above 1.3300 gave way to steadier trading near 1.3350. At around 1.1190 in the early response to Tuesday's inflation data, EUR/USD was 0.28% lower. Its decline continued on Wednesday.

Gold Regains Ground After Tuesday's Fall

A 2.67% decline on Tuesday, following U.S. inflation data and remarks from Federal Reserve officials, gave way to a gold rebound to around $4,050 on Wednesday. The preceding North American session had taken the metal down towards $4,000.

U.S. Equity Futures Advance After Nasdaq Recovery

After touching a Tuesday session trough just above 27,400, the Nasdaq 100 recouped ground towards 27,750. Wednesday's European session brought a 1.45% rise in Nasdaq 100 futures to around 28,230, while S&P 500 futures moved 0.60% higher to around 7,590 and Dow Jones futures increased 0.16% to around 52,400.

U.S. Inflation Surprises & Federal Reserve Tightening Remains in Focus

Above-Forecast U.S. Core CPI Keeps Further Fed Rate Rises Under Discussion

October delivered another 0.3% month-on-month increase in U.S. core CPI, beating the 0.2% forecast and extending that run to three consecutive months. Consumer inflation was stronger than expected: headline CPI increased 0.4% against a forecast of 0.3%, although this was below September's 0.6% rise.

A three-month annualised headline inflation rate of 5.72% was cited by Deutsche Bank, using the more precise monthly reading of 0.35%. The equivalent annualised core measure reached 3.75% in its strategists' calculations, its fastest pace since April 2024. Alongside persistent shelter costs and an acceleration in grocery and food inflation, Rabobank noted that earlier energy shocks were passing through with a lag to medical care, household furnishings and other daily expenses.

According to Commerzbank, the inflation release was preceded by Fed Governor Christopher Waller's call for a December rate rise of at least 25 basis points. Waller considered a core monthly reading of 0.3% or more sufficient to warrant examining a 50-basis-point increase. Policy remained 50 basis points below a “modestly restrictive level”, Dallas Fed President Lorie Logan said in arguing for at least two further 25-basis-point rises. She also allowed for a quicker response this winter.

The failure of services inflation to ease drew particular attention from Chicago Fed President Austan Goolsbee, who labelled the CPI report “borderline disturbing” on PBS Newshour. Despite a labour market he regarded as steady and stable, he warned of inflation becoming embedded in expectations. Labour-market conditions appeared to be firming even as inflation pressures persisted, Fed Vice Chair for Supervision Michelle Bowman said. For Kansas City Fed President Jeffrey Schmid, the monetary policy stance remained “fairly accommodative”.

A “somewhat restrictive” policy stance and further “gradual” rate rises were favoured by Philadelphia Fed President Anna Paulson. She placed underlying inflation between 2.5% and 3%, where it remained stuck, but stressed the difference between current conditions and a situation calling for faster action. If inflation expectations increased, wage pressures gathered strength or underlying inflation rose, she would favour a quicker response. Her assessment of the present was: “Right now, that's not what I'm seeing.”

Markets moved closer to fully allowing for a December rate rise of 25 basis points from the current federal funds target range of 3.75%-4.00%. In Deutsche Bank's account, December tightening implied by futures stood at 21.0 basis points on Monday, increased to 27.7 basis points by Tuesday's close and reached 28.5 basis points on Wednesday morning. The last of those readings implied a 14% probability of a 50-basis-point increase. Odds reached as high as 15% according to BBH, with a subsequent Wednesday reading at 11.5%. Separately, Deutsche Bank noted that Tuesday brought a 22.3-basis-point rise in the rate priced for the September 2027 meeting.

Energy Rebounds & Middle East Diplomacy Remains in Focus

WTI Reclaims $85 With Middle East Peace Negotiations Still Unresolved

Two days of losses had driven West Texas Intermediate crude to two-month lows before prices turned higher. In Wednesday's Asian session, the recovery brought crude to around $85.60 per barrel.

Hopes of an easing in tensions between the United States and Iran had shaped the earlier price action. Later on Wednesday, however, WTI remained above $85 as concerns grew over the absence of progress towards a Middle East peace agreement.

European Central Bank Weighs Policy Options

Knot Keeps a Tailored ECB Crisis Instrument Under Consideration

A future crisis “of a different nature” could leave room to develop another, more tailored instrument, Klaas Knot indicated to the Financial Times, without ruling out that option. The Dutch candidate is seeking to succeed ECB President Christine Lagarde.

Discussing possible crisis support, rather than putting forward a specific new instrument or announcing a policy decision, Knot said: “If circumstances require it, we will not hesitate to take action,”

Nagel Backs ECB Interest-Rate Rise in December

December monetary tightening by the ECB won support from Bundesbank President Joachim Nagel in comments to Bloomberg TV. Also a member of the ECB Governing Council, Nagel said: “It is rather obvious that we have to increase in December,”

Lane Cautions That Cheaper Energy May Leave Underlying Inflation Rising

An easing in underlying price pressures would not necessarily follow a decline in energy prices, ECB Chief Economist Philip Lane warned at the Bank of England and its Watchers Conference. In his words, “it would be a surprise if there are no second-round effects”.

Drawing a distinction between the direct effect of energy costs and wider inflation trends, Lane said that if energy prices declined modestly, “headline inflation could fall while underlying inflation rises”.

Australian Economy Faces Policy Tightening

Australian Consumer Confidence Declines to 78.2 After 2.7% Fall

A 2.7% decline left Australian consumer confidence at 78.2 against a backdrop of Reserve Bank of Australia monetary tightening.

Policy Calendar Turns to Upcoming Events

• Federal Reserve Sets December Policy Decision (9 December 2026): The December interest-rate decision from the U.S. Federal Open Market Committee is due on 9 December.