A big jump in U.S. producer prices sent bonds and stocks lower on Tuesday, while the dollar climbed on expectations that U.S. interest rates will rise faster than in other major economies, according to Reuters. U.S. producer prices surged 1.9 percent in September, the biggest monthly gain in more than 15 years, while core prices (excluding food and energy) climbed 0.3 percent. Economists had expected rises of 1.1 percent and 0.2 percent, respectively. "The numbers are bit worse than expected and support the view the Fed will have to keep raising interest rates," said Michael Metz, chief investment strategist at Oppenheimer Holdings. U.S. stock futures extended losses as the threat of higher interest rates grew, while European shares also turned negative with the FTSEurofirst 300 index down 0.1 percent. The dollar extended gains, hitting a two-year high against the yen at just under 116 yen and dragging the euro down 0.8 percent to $1.1930. Benchmark U.S. 10-year yields rose, trading at around 4.51 percent after the inflation data, while the yield on 10-year euro zone government bonds was little changed around 3.31 percent. Euro zone interest rate futures hit fresh 6-month lows after European Central Bank officials said the bank would not hesitate to raise interest rates if medium-term inflation threatened to run out of control. High oil prices drove euro zone consumer prices up 2.6 percent last month, data showed earlier, highlighting the possibility the ECB will take action to curb inflation.
