Veterans Day closes bond market after hot CPI data hits stocks

The timing could hardly be more awkward.

US inflation data came in above expectations yesterday, pushing Treasury yields higher and equities lower. As traders were still assessing the fallout, the bond market closed for the Veterans Day holiday.

Today is Veterans Day across the US, so fixed-income markets are shut while stock exchanges operate as normal.

That creates an unusual backdrop after Wednesday's market response to the CPI figures.

October headline inflation rose 0.4% month-on-month against the 0.3% consensus forecast, while core inflation increased 0.3% compared with estimates of 0.2%. That was enough to revive concerns that the Fed may need to tighten policy more aggressively in December, especially after Fed governor Waller flagged the possibility of a 50-basis-point rate move if price pressures came in stronger than anticipated.

The bond market response was sharp. Two-year Treasury yields advanced roughly 18 basis points to 4.74%, while 10-year yields climbed about 12 basis points to 5%. Equities also sold off, with the S&P 500 losing 0.4% and the Nasdaq falling 0.7%. The decline would have been steeper without a late-session recovery.

So what does that mean for Thursday's trading?

With bond market and fixed-income traders inactive, the usual Treasury yield gauge that shows whether the inflation shock is being digested or repriced will not be available.

That could leave broader markets trading with less conviction as some institutional participants step away for the holiday. However, quieter conditions do not mean risk has disappeared. Thinner liquidity can amplify moves when larger trades hit the market, particularly if equities remain under pressure.

For the European morning session, attention should focus on US futures, the dollar and whether technology stocks can stabilise before the Wall Street open later.