October inflation runs hotter than expected, and a Fed governor floats a bigger December hike

The October consumer price index came in above economists' forecasts on both the headline and core measures, which strip out food and energy. Food, transportation services and electricity were among the categories pushing prices up, and shelter costs kept rising as well. Because of last year's government shutdown, the Labor Department did not publish a year-over-year figure this time.

Just before the release, Fed Governor Christopher Waller told a conference in London that a hot reading should lead the Fed to consider a larger hike than usual at its December 8-9 meeting, saying a smaller move could put the Fed's credibility at risk. After the data, futures markets moved to fully price in a December hike, with some odds on a bigger one.

Treasury yields climbed sharply on the news, building on Friday's jump after the strong jobs report. Mortgage pricing tends to follow those yields, so lenders are likely to reprice higher today, giving back much of the improvement seen earlier this month. Wholesale inflation data on Friday is the next test.