Inflation Came in Hotter Than Expected in October. A Rate Hike is All But Certain Now.

An interest rate hike by the Federal Reserve is all but certain after the October inflation reading came in hotter than expected on Tuesday.

Chances of a hike to the 4%-4.25% range stand at 98.8%, according to the CME Group's FedWatch tool. They clocked in at 84% before the report came in.

The Bureau of Labor Statistics detailed that the Consumer Price Index climbed 0.4% last month, compared to the 0.3% expected by analysts. "The food index increased 0.5 percent in October, as the food at home index rose 0.4 percent and the food away from home
index increased 0.5 percent. The index for energy increased 0.7 percent over the month following a 5.2-percent increase in September," reads a passage of the report.

Core CPI, which excludes more volatile components like food and energy, also climbed 0.3%, compared to the 0.2% expected. "Indexes that increased over the month include recreation, medical care, motor vehicle insurance, household furnishings and operations,
and education. Conversely, the index for used cars and trucks and the index for communication were among the small number of major indexes that decreased in October," the BLS said.

Federal Reserve Governor Christopher Waller said on Monday he would back "more robust action" if the inflation reading was higher than expected. "In that case, I believe a 50 basis point hike in the policy rate should be considered at the December meeting," he said, adding that a quarter-point hike "would put our credibility at risk, a risk I am not eager to take."

Energy prices, which have been contributing to inflation throughout the year, could see a reprieve over the next weeks as oil prices fall on hopes that the Iran war might not return to full-fledged hostilities.

Trump said in a social media post on Monday night that he had an "excellent" conversation with Qatari Prime Minister Mohammed bin Abdulrahman bin Jassim Al Thani about the course of the war.

"Qatar, Saudi Arabia, UAE, Bahrain, Kuwait, and others, would prefer the status quo, in other words, a continuation of the Greatest Naval Blockade in History, and the new Operation Iron Gate — Therefore, Land and Sea," Trump said in a passage of the post, in reference to a decision to also block Iranian exports through land, not only sea.

Trump said, the U.S. remains "locked and loaded" to resume strikes but "at this point, however, that seems to be quite unlikely."

"Israel, and the entire Middle East, are protected from Iranian danger and threats. We are seeing positive momentum toward an end to this Conflict, and will ensure that America's interests are at all times protected. At the conclusion of this Military Engagement, the American People, and the World, will be far safer and more secure," Trump concluded.