Daily Financial Breakfast 11 November 2026: WTI Regains Ground Above $85 as US Core CPI Increases 0.3%

Market News Today: What Is Shaping Sentiment?

• Further Federal Reserve rate increases remained under discussion as October's U.S. core consumer price rise exceeded forecasts. Prices increased 0.3% for the third month running, against expectations of 0.2%.
• A rebound took WTI crude back above $85 per barrel following two days of declines. On Wednesday, concerns emerged over the absence of headway in Middle East peace negotiations.
• A future crisis might warrant a new, tailored policy instrument, ECB presidential candidate Klaas Knot indicated to the Financial Times, saying he would not exclude that option.
• The case for a December ECB interest-rate increase was “rather obvious”, Bundesbank President Joachim Nagel said.
• Declining energy prices could bring headline inflation down without preventing underlying inflation from rising, ECB Chief Economist Philip Lane warned.
• Monetary tightening by the Reserve Bank of Australia coincided with a 2.7% fall in Australian consumer confidence to 78.2.

How Are Markets Responding?

What Drove U.S. Treasury Yields Higher?

Tuesday's rise in U.S. two-year Treasury yields amounted to 19 basis points, the largest daily advance since 2025 according to Deutsche Bank. Rabobank reported that 10-year yields increased 14 basis points, briefly crossing 5%, alongside the two-year jump.

Where Are Foreign Exchange Markets Trading?

After Tuesday's advance of more than 0.5%, the U.S. Dollar Index was near 102.20 in Asian trading on Wednesday. USD/JPY subsequently moved closer to 160 after trading near 158.90 in Asia. With the Canadian dollar at a four-week low, USD/CAD touched 1.4230. Early European trading saw USD/CHF extend its rise into a second consecutive day, reaching roughly 0.8260. A 0.88% decline on Tuesday left AUD/USD below 0.6900. GBP/USD found stability near 1.3350 after retreating to just above 1.3300. Following Tuesday's inflation release, early trading put EUR/USD near 1.1190, down 0.28%; Wednesday brought further declines.

How Has Gold Responded to Its Decline?

Wednesday brought a recovery in gold to roughly $4,050. The metal had lost 2.67% on Tuesday in the wake of U.S. inflation figures and Federal Reserve officials' comments, approaching $4,000 during the North American session.

How Are U.S. Equities and Futures Performing?

A rebound towards 27,750 followed the Nasdaq 100's Tuesday session low just above 27,400. On Wednesday, European trading saw gains across U.S. futures: Nasdaq 100 futures climbed 1.45% to roughly 28,230, S&P 500 futures added 0.60% to roughly 7,590, and Dow Jones futures advanced 0.16% to roughly 52,400.

U.S. Inflation & Federal Reserve Policy Prospects

Will Above-Forecast U.S. Core CPI Prompt Further Fed Tightening?

October's U.S. inflation figures surpassed forecasts, as a third straight monthly core CPI increase of 0.3% exceeded the expected 0.2%. For headline CPI, the 0.4% rise was higher than the 0.3% forecast, though below September's increase of 0.6%.

On Deutsche Bank's more precise measure, monthly headline inflation came in at 0.35%, taking the three-month annualised pace to 5.72%. The bank's strategists calculated a corresponding core rate of 3.75% on an annualised basis, the highest since April 2024. In Rabobank's assessment, grocery and food inflation was accelerating and shelter costs remained persistent. Earlier energy shocks were also feeding through with a delay to medical care, household furnishings and other everyday expenses.

According to Commerzbank, a December rate rise of at least 25 basis points had already been advocated by Fed Governor Christopher Waller ahead of the inflation data. In his view, a monthly core reading at or above 0.3% justified weighing a 50-basis-point increase. For Dallas Fed President Lorie Logan, policy remained 50 basis points below a “modestly restrictive level”. She sought at least two further increases of 25 basis points and left open the possibility of a faster response this winter.

Services inflation's failure to decline was a particular concern for Chicago Fed President Austan Goolsbee, who called the CPI report “borderline disturbing” during a PBS Newshour interview. While describing the labour market as steady and stable, he cautioned against inflation becoming embedded in expectations. Continued inflation pressures, alongside labour-market conditions that appeared to be strengthening, were noted by Fed Vice Chair for Supervision Michelle Bowman. In Kansas City Fed President Jeffrey Schmid's assessment, monetary policy was still “fairly accommodative”.

Further rate rises should be “gradual”, according to Philadelphia Fed President Anna Paulson, who argued for a “somewhat restrictive” policy stance. Although underlying inflation remained stuck between 2.5% and 3% in her assessment, she separated present conditions from those that would justify a quicker response. Higher inflation expectations, building wage pressures or an increase in underlying inflation would lead her to favour moving faster. She added: “Right now, that's not what I'm seeing.”

A December increase of 25 basis points from the prevailing federal funds target range of 3.75%-4.00% moved towards being fully reflected in futures prices. According to Deutsche Bank, implied December tightening increased from Monday's 21.0 basis points to 27.7 basis points at Tuesday's close, reaching 28.5 basis points on Wednesday morning. That observation implied a 14% likelihood of a 50-basis-point move. BBH put the odds at as much as 15%, before a later Wednesday observation indicated 11.5%. The rate implied for the September 2027 meeting also increased by 22.3 basis points on Tuesday, Deutsche Bank reported.

Energy Prices & Middle East Peace Negotiations

Can WTI Sustain Its Recovery Above $85 With Peace Talks Unresolved?

WTI's rebound from two-month lows brought West Texas Intermediate crude to roughly $85.60 per barrel in Wednesday's Asian session. The recovery reversed two days of price declines.

Hopes that United States-Iran tensions would ease had influenced earlier trading. With WTI still above $85 later on Wednesday, attention turned to concerns that a Middle East peace agreement was making no progress.

What Lies Ahead for the European Central Bank?

Could a Different Crisis Call for a New ECB Instrument, as Knot Suggests?

For a future crisis “of a different nature”, Klaas Knot left open the development of an additional, more tailored instrument in comments to the Financial Times. The Dutch candidate is seeking to succeed ECB President Christine Lagarde.

Addressing possible crisis support, Knot said: “If circumstances require it, we will not hesitate to take action,” He was neither proposing a particular new instrument nor announcing a policy decision.

Why Does Nagel See a December ECB Rate Rise as “Rather Obvious”?

An interest-rate rise by the ECB in December received the backing of Bundesbank President Joachim Nagel during a Bloomberg TV interview. Nagel, also an ECB Governing Council member, said: “It is rather obvious that we have to increase in December,”

Could Cheaper Energy Conceal Underlying Inflation, as Lane Warns?

Underlying price pressures need not weaken simply because energy becomes cheaper, ECB Chief Economist Philip Lane cautioned. His remarks at the Bank of England and its Watchers Conference included the warning that “it would be a surprise if there are no second-round effects”.

Separating energy costs' direct contribution from wider inflation developments, Lane said that with a modest decline in energy prices, “headline inflation could fall while underlying inflation rises”.

What Do Australia's Economic Indicators Show?

What Accompanied Australian Consumer Confidence's 2.7% Fall to 78.2?

Against a backdrop of monetary tightening by the Reserve Bank of Australia, Australian consumer confidence declined to 78.2, a fall of 2.7%.

Which Key Events Are Coming Up?

• When Is the Federal Reserve's December Policy Meeting? (9 December 2026): On 9 December, the U.S. Federal Open Market Committee is due to announce its December interest-rate decision.