Treasury yields spike as Fed's Waller floats December rate hike

US government bond yields kept climbing on Tuesday after Federal Reserve Governor Christopher Waller floated the idea of a bigger rate hike in December. Waller said a half-point increase could be warranted, and signaled a move might be necessary if inflation lands at 0.3% or higher. The trigger: October's Consumer Price Index, which came in hotter than economists expected for the second straight month.

The CPI rose 0.4% month over month, cooling from September's 0.6% gain but still running above forecasts. Traders dumped bonds in response. By 11:14 am ET the 2-year yield had surged 20.1 basis points, now at 4.746%, according to the report.

The long end moved too. The 10-year yield climbed 13.4 basis points to 4.996%, while the 30-year jumped 10.1 basis points, reaching 5.355%. Earlier in the morning the 2-year had already been up 14.6 basis points, sitting at 4.693% at 8:32 am ET — meaning the selling only accelerated as the session wore on.

Waller's comments put a December hike squarely back on the table, with the size of the move now the open question. For now, the bond market is pricing in the possibility of tighter policy for longer, and yields across the curve are feeling it.