{"id":441994,"date":"2026-11-12T07:40:10","date_gmt":"2026-11-12T00:40:10","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/ubs-sees-limited-support-for-a-50bp-fed-hike-in-december-despite-hot-october-cpi-441994\/"},"modified":"2026-11-12T07:40:10","modified_gmt":"2026-11-12T00:40:10","slug":"ubs-sees-limited-support-for-a-50bp-fed-hike-in-december-despite-hot-october-cpi","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/ubs-sees-limited-support-for-a-50bp-fed-hike-in-december-despite-hot-october-cpi-441994\/","title":{"rendered":"UBS sees limited support for a 50bp Fed hike in December despite hot October CPI"},"content":{"rendered":"<div>\n<p dir=\"ltr\">With futures pricing slightly more than a full quarter-point hike for December, the 50bp debate is now a tail risk the market will react to on any Fed speaker headline. Treasury yields close to 5% keep the dollar supported, including against the yen ahead of the Bank of Japan\u2019s own expected December hike, which leaves the US-Japan rate gap a key driver of USD\/JPY. Higher real yields are also a headwind for gold, which has tended to trade on Fed hike expectations rather than as a safe haven this year. For equities, the combination of firmer inflation and rising long-end yields adds pressure to richly valued tech shares, which are already dealing with the Nvidia leadership shock.<\/p>\n<p dir=\"ltr\">&#8212;<\/p>\n<p dir=\"ltr\">\nOctober\u2019s inflation report makes a December Fed hike look all but certain, and UBS thinks the real risk is a faster run of quarter-point moves rather than one big step.<\/p>\n<p dir=\"ltr\">Summary:<\/p>\n<ul dir=\"ltr\">\n<li>US October CPI rose 0.4% m\/m (forecast 0.3%) and core rose 0.3% (forecast 0.2%), with broad price gains<\/li>\n<li>The 10-year Treasury yield rose 11bp to close to 5% and the S&amp;P 500 fell 0.4% on Tuesday<\/li>\n<li>Fed Governor Waller said before the data that core at 0.3% or more could warrant considering a 50bp December hike, and Dallas Fed President Logan favors at least two more 25bp hikes<\/li>\n<li>Fed funds futures price about 28bp of hikes for December<\/li>\n<li>UBS sees limited FOMC support for 50bp and keeps its base case of 25bp hikes in December and March<\/li>\n<li>Three-month annualized core inflation rose to about 3.75%, and tariff-sensitive and IT goods prices stayed firm<\/li>\n<\/ul>\n<p dir=\"ltr\">\nA hotter than expected US inflation report has put an unusual question in front of the Federal Reserve: whether its next hike should be a double-sized one. UBS thinks the answer is still no. But the bank says October\u2019s data strengthen the case for at least two more quarter-point increases and raise the risk that they come faster.<\/p>\n<p dir=\"ltr\">Headline consumer prices rose 0.4% in October, above the 0.3% forecast. Core prices, which exclude food and energy, rose 0.3% against expectations of 0.2%. Price gains were broad, covering food, housing, recreation, medical care, electricity, airfares and delivery services. The 10-year Treasury yield jumped 11 basis points to close to 5%, and the S&amp;P 500 fell 0.4% on Tuesday.<\/p>\n<p dir=\"ltr\">The 50 basis point idea came from Fed Governor Christopher Waller.\u00a0Before the release, he said a core reading of around 0.3% or more could justify considering a half-point move in December.<\/p>\n<ul>\n<li><a href=\"https:\/\/investinglive.com\/central-banks\/fed-s-waller-says-a-half-point-rate-hike-in-december-may-be-needed-if-core-cpi-comes-in-hot\" target=\"_blank\" rel=\"follow\">Fed&#8217;s Waller says a half-point rate hike in December may be needed if Core CPI comes in hot<\/a><\/li>\n<\/ul>\n<p dir=\"ltr\"> Separately, Dallas Fed President Lorie Logan said she favors at least two more quarter-point hikes and suggested the Fed could move more quickly this winter. <\/p>\n<ul>\n<li><a href=\"https:\/\/investinglive.com\/central-banks\/fed-s-logan-it-s-clear-that-fed-needs-at-least-two-more-quarter-point-rate-hikes\" target=\"_blank\" rel=\"follow\">Fed&#8217;s Logan: It&#8217;s clear that Fed needs at least two more quarter-point rate hikes<\/a><\/li>\n<\/ul>\n<p dir=\"ltr\">Fed funds futures now price about 28 basis points of tightening for December. That implies a full quarter-point hike and only a small chance of something larger.<\/p>\n<p dir=\"ltr\">UBS argues that appetite on the rate-setting committee for a 50 basis point move is limited. The bank said a hike of that size could signal that policy is well below where it needs to be and make the tightening cycle look open-ended. Its base case remains quarter-point hikes in December and March.<\/p>\n<p dir=\"ltr\">The detail behind the headline numbers explains the concern. Monthly core inflation edged down to 0.30% from 0.33%, but the three-month annualized pace rose to about 3.75%, from below 2% as recently as August. Excluding used cars, which fell 1.2%, core goods prices rose around 0.4%. Tariff-sensitive items such as toys, furniture and bedding, and appliances each rose more than 1%, and IT hardware prices climbed 0.4%. UBS noted that those categories carry larger weights in the Fed\u2019s preferred PCE gauge than in CPI. It said goods disinflation looks a less reliable theme heading into 2027.<\/p>\n<p dir=\"ltr\">Shelter inflation slowed to 0.30% from 0.39% but remains sticky. Energy rose a further 0.7%, although its contribution to the headline figure faded. After two disappointing reports in a row, the December debate is now about the size of the move, not whether one comes.\u00a0<\/p>\n<p dir=\"ltr\">&#8212;-<\/p>\n<p dir=\"ltr\">Its been a long year, final FOMC meeting coming up in 3 weeks:<\/p>\n<p dir=\"ltr\">\n<p>                            This article was written by Eamonn Sheridan at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>With futures pricing slightly more than a full quarter-point hike for December, the 50bp debate is now a tail risk the market will react to on any Fed speaker headline. Treasury yields&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-441994","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/441994","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=441994"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/441994\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=441994"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=441994"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=441994"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}