Key facts
- Fed funds futures implied a 91.9% chance of a quarter-point hike on December 9, up from 84% a day earlier, per CME Group's FedWatch tool.
- Traders priced a 9.1% chance of a 50-basis-point move and better-than-even odds of a second hike in January.
- The 10-year Treasury yield rose 12 basis points overnight and 1 basis point in Asia to 4.9958%.
- Japan's 10-year government bond yield rose 7 basis points to 2.755% and Australia's rose 6 basis points to 5.05%.
- Goldman's David Mericle said the firm still expects a second 25-basis-point hike in December rather than a 50-basis-point move.
- The Australian dollar fell nearly 0.9% as traders wagered its central bank is done raising rates after five increases this year.
The dollar held near a two-week high on Wednesday, November 11, 2026, after a hotter-than-expected US inflation report and comments from Federal Reserve officials firmed expectations of another rate increase, Reuters reported.
Data showed overnight that core US inflation ran at a monthly rate of 0.3% in October, above the 0.2% forecast. Before the data landed, Fed Governor Christopher Waller said a core reading of 0.3% would prompt him to consider a 50-basis-point hike at the December meeting. Dallas Fed President Lorie Logan said two more rate rises were needed, possibly rapidly, Chicago Fed President Austan Goolsbee warned of a real inflation issue, and Philadelphia Fed President Anna Paulson called for gradual rate hikes.
Fed funds futures implied a 91.9% chance of a quarter-point hike at the meeting concluding on December 9, up from 84% a day earlier, according to CME Group's FedWatch tool. Traders priced a 9.1% chance of a 50-basis-point move, with better-than-even odds of a second hike in January. Three quarter-point moves were fully priced in by the middle of next year.
The repricing lifted the dollar, which gained 0.5% overnight against its major peers and edged up another 0.1% to 102.29 on Wednesday. The 2-year Treasury yield rose 18 basis points overnight and added 2 basis points in Asia to 4.7482%, while the 10-year yield rose 1 basis point to 4.9958% after a 12-basis-point rise overnight. Japan's 10-year government bond yield rose 7 basis points to 2.755% and Australia's rose 6 basis points to 5.05%.
David Mericle, chief US economist at Goldman, said the firm continues to expect a second 25-basis-point hike in December because it suspects most FOMC voters would hesitate to jump to a 50-basis-point move. He said Goldman is adding a third 25-basis-point hike to its forecast in March 2027, which would take the funds rate to a peak of 4.25-4.5%.
The Australian dollar fell nearly 0.9% as traders wagered its central bank is done tightening after five rate rises this year, with rate cuts expected next year. Gold fell 2.6% overnight before edging up 0.2% to $4,030.56 an ounce on Wednesday. Brent crude futures rose 0.7% to $92.16 a barrel after dropping as low as $89.16 overnight.
In Asia, MSCI's broadest index of Asia-Pacific shares rose 0.2%, Japan's Nikkei climbed 0.6%, South Korea's KOSPI rose 0.4% and China's blue chips lost 0.2%. Nasdaq futures bounced 0.5%, S&P 500 futures rose 0.2% and European stock futures gained 0.6%. SoftBank Group shares slid 3.3% after it took a $7 billion net loss in the second quarter, hit by buildout costs for US data centers.