Oil declines as Fed's Waller flags half-point hike; CPI release in focus

Crude oil falls sharply once more, Treasury yields climb, and U.S. equity futures show a mixed picture as the 8:30 AM ET CPI release approaches. The greenback strengthens broadly, though gains are mostly modest. The Australian dollar posts the weakest performance among major currencies versus the USD, with AUDUSD off 0.30%. The New Zealand dollar fares best, with NZDUSD slipping just 0.04%.

Oil's decline continues as President Trump downplays new strikes on Iran. WTI trades at $84.90, down 2.25% after sliding roughly 4.5% on Monday. Trump said he would refrain from fresh strikes on Iran after appeals from regional leaders, including Qatar's prime minister. He indicated the U.S. naval blockade would remain for now, while Tehran continues to insist on conditions for talks, including lifting the blockade. Shipping disruptions near the Strait of Hormuz persist as a risk, even as traders price in lower odds of an immediate escalation.

For crude, the key question is whether diplomatic efforts alter shipping conditions. Any further signs of progress could remove more of the supply-risk premium from oil. A new disruption near Hormuz could quickly bring some of that premium back.

Waller gives traders a number to watch at 8:30 AM ET

Fed Governor Christopher Waller stated he would back a 25-basis-point rate increase in December even if October inflation eases. If core CPI rises roughly 0.3% month-on-month or above, he said the Fed ought to consider 50 basis points. The consensus estimate stands at 0.2%, meaning a one-tenth upside surprise would place the report exactly at the threshold he highlighted.

Waller expressed concern about the breadth of price increases and how long elevated energy costs could continue to feed into other prices. He views employment as near the Fed's objective and anticipates output will keep growing at a solid pace, even if growth decelerates this quarter. In additional comments, he said he aims to reverse at least the three insurance cuts and is looking for a much smaller adjustment than 150–200 basis points. Treasuries initially sold off, equities came under pressure, and the dollar strengthened on the half-point headline. Treasuries recouped some ground after his follow-up remarks.

In the UK, Bank of England Deputy Governor Clare Lombardelli indicated that further rate increases might be necessary in the near term, even with the UK labor market stuck in low gear. She described a low-hire, low-fire environment and said she is monitoring whether hiring picks up, workers can move into available roles, and softer labor demand is actually easing wage and price pressures. For now, she sees inflation risks as skewed to the upside. The longer energy costs remain elevated, the more pressure businesses face to restore margins by passing those costs to customers. That could keep inflation persistent and make it more difficult to return to the BoE's 2% target.

The 10-year yield bounces from the 4.816% area

The U.S. 10-year yield has rebounded to 4.894% after dropping to as low as 4.814% last week. That low simultaneously tested two technical levels at 4.816%. The first is the 38.2% Fibonacci retracement of the advance from the March 2 low to the 5.365% high. The second is the rising 100-day moving average.

This makes the 4.814%–4.816% zone a key barometer. Holding above that range keeps the yield rebound intact. A sustained break below would hand more control to bond buyers and allow a deeper retracement in yields. CPI provides the first test. The 10-year auction this afternoon offers another measure of demand.

• 2-year yield: 4.618% (an increase of 7.1 basis points)
• 5-year yield: 4.707% (up 4.8 basis points)
• 10-year yield: 4.894% (up 3.3 basis points)
• 30-year yield: 5.271% (up 1.5 basis points)

The 2-year yield is pacing the advance. After the CPI release, that maturity will be watched for the clearest early signal of how traders are adjusting their December rate expectations.

Nasdaq 100 futures ease after Monday's 3.40% rally

• Monday's Nasdaq 100 gain: +3.40%, the largest daily rise since March 31, 2026, and second-largest since May 12, 2025.
• Dow futures at 7:40 AM ET: +163 points.
• S&P 500 futures at 7:40 AM ET: +6 points.
• Nasdaq 100 futures at 7:40 AM ET: −99 points.
• Stoxx Europe 600: +0.9% in morning trade.

The Dow is stronger this morning, while the Nasdaq 100 retraces part of Monday's rise. Elsewhere, gold falls 1.54% to $4,076.92, silver declines 2.17% to $52.23, and Bitcoin drops 1.49% to $74,145.

Currency ranges ahead of CPI

• EURUSD: 1.1214–1.1251, 37 pips (57% of average)
• GBPUSD: 1.3423–1.3458, 35 pips (48% of average)
• USDJPY: 157.88–158.24, 36 pips (42% of average)
• USDCHF: 0.8175–0.8211, 36 pips (64% of average)
• USDCAD: 1.4106–1.4140, 34 pips (52% of average)
• AUDUSD: 0.6907–0.6930, 23 pips (46% of average)
• NZDUSD: 0.5624–0.5649, 25 pips (50% of average)

USDJPY has traveled the smallest portion of its typical range. It also sits near the session high as U.S. yields rise. That makes 158.24 a key level to monitor for the CPI reaction. GBPUSD and AUDUSD have also moved less than half of their normal ranges.

North American calendar

8:30 AM ET – U.S. October headline CPI month-on-month – Forecast +0.3%, Prior +0.6%.
8:30 AM ET – U.S. October core CPI month-on-month – Forecast +0.2%, Prior +0.3%.
1:00 PM ET – U.S. Treasury 10-year note auction – $42 billion offering.

Attention centers on the monthly CPI figures. Due to a gap in October 2025 data caused by last year's government shutdown, there will be no official year-over-year comparison for October.

EURUSD, USDJPY and GBPUSD technical outlook

EURUSD trades at 1.1215, one pip above the session low of 1.1214. Sellers hold the near-term advantage. A sustained break below 1.1214 would target the round 1.1200 level. If the break fails and the price returns above 1.1214, sellers forfeit that immediate edge. A move above 1.1251 would hand more control to buyers.

USDJPY trades at 158.20, just under the 158.24 high. Buyers have the near-term edge. A sustained move above 158.24 would bring 158.50 into view. If the break fails, 158.00 becomes the first downside level to watch. A decline below that would reintroduce the session low at 157.88.

GBPUSD trades at 1.3426, close to the 1.3423 low. A break below 1.3423 would give sellers greater control and shift focus to 1.3400. If buyers protect the low, 1.3458 is the upper range boundary and the level they must surpass to seize more control.

Around the CPI release, the first retest will be key. If USDJPY breaks above 158.24 and buyers hold on a pullback, they gain a nearby level to support. If the price falls back into the range, the breakout buyers lose that level.