Fed Interest Rate Hike Seems More Likely This Month After Alarming Inflation Data

New inflation data released on Wednesday is raising the odds of a Federal Reserve interest rate hike later this month, potentially putting a spotlight on rising mortgage rates ahead of the midterm elections.Overall prices jumped 3.7% in the 12 months through September, according to consumer price index data release by the Labor Department. That's up from 3.4% annual inflation the prior month, and more than economists had expected.Markets wasted no time pricing in the new inflation data, with investors raising the probability of a Fed rate hike in October to 35%, up from 22% a day earlier, according to CME FedWatch. On prediction marketplace Polymarket, the odds of an October hike briefly spiked to nearly 50% immediately after the CPI report, but settled back closer to 30% later in the day.Bond markets reacted immediately as well, with the 10-year Treasury yield jumping 5 basis points on the release and 11 basis points within 15 minutes. The 10-year is a key benchmark for mortgage rates, which last week hit a three-year high of 7.40%.Although most analysts still expect the Fed to avoid raising rates just a week before the midterm elections, market reaction to the CPI report suggests...