Fed Rate Hike Bets Jump as Hot U.S. CPI Lifts the Dollar

Fed rate hike bets jumped after U.S. CPI inflation came in hotter than expected, sending two-year Treasury yields up the most since April 2025. Fiona Cincotta, StoneX Senior Market Analyst, explains how hotter inflation and hawkish Fed commentary are repricing rate expectations, Treasury yields and the U.S. dollar. A 25-basis point December hike is now almost fully priced in, while markets assign a 10% probability to an outsized 50-basis point move. Federal Reserve Governor Christopher Waller said before the data that a higher-than-expected core inflation reading would prompt him to consider a 50-basis point hike. Three Fed rate hikes are now fully priced in before the middle of next year, following hawkish commentary from Dallas Fed President Lorie Logan and Chicago Fed President Austin Goolsbee. Rising Treasury yields are lifting the U.S. dollar against its major peers, with USD/JPY testing the upper bound of a six-week range. 00:00 - Hot U.S. CPI Beats Forecasts 00:43 - Waller Leads the Fed Hawks 01:10 - Three Fed Hikes Now Priced In 01:30 - Treasury Yields Spike Hard 02:27 - Dollar-Yen at Breakout Point Discover Actionable Insights with the latest Market Outlook Reports: https://intel.stonex.com/offer?language=en&campaignId=A908C315-DC62-4F35-AC16-870BB71E84D1&utm_source=youtube&utm_medium=social&utm_campaign=sxtv_guest_fiona_cincotta&utm_content=share Like and subscribe for more financial market insights. #FederalReserve #StoneX #FionaCincotta #USDJPY --------- Like this video? Subscribe and turn on notifications so you don't miss any videos from StoneX: https://www.youtube.com/@stonex_official Visit https://www.stonex.com/en/insights/thought-leadership/?utm_source=youtube&utm_medium=social for insights, perspectives and thought leadership from StoneX's global network of experts. Visit our website: https://www.stonex.com?utm_source=youtube&utm_medium=social