The dollar rose, US Treasury yields jumped and Wall Street stocks fell yesterday after data showed US consumer prices rose more than expected last month, reinforcing expectations the Federal Reserve may raise interest rates as soon as this month.
The dollar rose 0.68 per cent against a basket of currencies to its highest since April 2025, while US 2-year Treasury yields , which are most sensitive to shifts in expectations for inflation and monetary policy, leapt 7.2 basis points on the day to 4.87 per cent.
“The reading was hotter than expected, not just with energy but elsewhere, suggesting higher tariffs and conflict-driven disruptions are bleeding into other categories,” said Mark Hackett, chief market strategist at Nationwide. “Investors are coming to terms with ‘higher-for-longer’ inflation.”
The euro dropped 0.73pc to $1.1117, while the pound fell 0.81pc to $1.3145. The Japanese yen weakened 0.35pc against the greenback to 158.87 per dollar.
On Wall Street, all three indexes were trading lower with technology and industrials driving losses while healthcare, consumer staples and energy stocks were higher.
The Dow Jones Industrial Average fell 0.17pc, the S&P 500 fell 0.94pc and the Nasdaq Composite fell 1.3pc.
More of Wall Street’s big banks reported earnings, with Bank of America, which saw profits fall in the third quarter, and Morgan Stanley, which beat expectations for its third-quarter profit thanks to strong equity trading.
Europe’s STOXX 600 pared some of the day’s gains and finished up 0.47pc, while the MSCI All-World index fell 0.77pc.
Sentiment was already fragile prior to the consumer data, given the renewed strength in oil prices following attacks on two vessels in the Strait of Hormuz and after Iranian officials said they were deploying new tactics to target ships, raising the risk of fresh disruption to energy supplies.
Brent crude futures, which are around their highest in nearly two weeks, were last down 0.06pc at nearly $106 a barrel.
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