Hot inflation, a 5% bond yield and a $1 trillion surplus

Hello,

Inflation came back to the centre of the stage this week. US consumer and producer prices beat forecasts, bond yields jumped, and markets now treat a December Fed rate rise as all but certain. Here are the stories that mattered, the mechanism behind them, and what comes next.

The week in five stories

1. US inflation ran hotter than expected. Consumer prices rose 0.4% in October and core prices 0.3%, both a tenth above forecasts. Energy slowed, but food and services kept rising: a sign the oil shock is spreading.
howtheworldworks.news/news/us-inflation-october-core-hotter

2. Markets now price a December Fed rise as near certain. The 2-year Treasury yield jumped 19 basis points in a day, its biggest rise since April 2025, and the odds of no change in December fell to about 3%. Some now bet on a half point.
howtheworldworks.news/news/fed-half-point-hike-in-play-yields-jump

3. The US 10-year yield passed 5%. It ended the week at 5.13%, up 27 basis points, its highest since October. Mortgages, company loans and share valuations are all priced off it.
howtheworldworks.news/news/us-10-year-yield-above-5-percent

4. China's trade surplus topped $1 trillion again. Exports rose 35.2% in October and imports 41.6%, mainly because oil got dearer. Chips and computer parts drove 40% of this year's export growth.
howtheworldworks.news/news/china-trade-surplus-tops-1-trillion

5. The oil market is returning to surplus. The IEA expects supply to exceed demand in the fourth quarter for the first time since the Iran war began, as Gulf exports recover. Brent briefly fell below $90 on 10 November before rebounding towards $96.
howtheworldworks.news/news/iea-oil-market-returns-to-surplus

The mechanism of the week: why bond prices fall when yields rise

A bond's payments are fixed. When new bonds pay more, old ones must get cheaper until a buyer earns the same return: price down, yield up, the same event seen from two sides. This week's jump in yields cut the value of bonds already held by pension funds, banks and savers, while locking in more income for new buyers.
howtheworldworks.news/mechanics/bond-prices-yields

The numbers

• US core consumer prices: +0.3% in October, against a 0.2% forecast
• US producer prices: +6.5% over the year to October, the most since November 2022
• US 10-year Treasury yield: 5.13% (13 Nov), up 27 basis points on the week
• S&P 500: 7,535.72 (13 Nov), up 2.15% on the week
• US 30-year mortgage rate: 7.11% (week to 12 Nov), a seven-week low
• UK GDP: +0.7% in the third quarter, the fastest this year

What to watch this week

• Mon 16 Nov: Japan's third-quarter GDP, expected to almost stall, and China's October retail sales and industrial output.
• Tue 17 Nov: US retail sales, and Nvidia's results after the US close: a test of the AI investment boom. howtheworldworks.news/news/nvidia-results-ai-test
• Wed 18 Nov: UK inflation for October, expected to rise to about 3.7%, and the minutes of the Fed's October meeting. howtheworldworks.news/news/uk-inflation-october-preview
• Thu 19 Nov: Japan's consumer prices, a key test for a Bank of Japan rise in December.

The full week ahead:
howtheworldworks.news/week

Did you follow the week?

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See you next Sunday,
How the World Works

Educational content only, not investment advice.