European stocks and bonds fell on Thursday, after data showed U.S. inflation picked up slightly faster than expected in September, dashing any hope that the Federal Reserve will slow the pace of its planned rate rises.
U.S. government data showed consumer prices accelerated at a rate of 8.2% in the 12 months to September, above expectations for a rise of 8.1% following August's 8.3% increase.
The core rate of inflation, which excludes food and energy prices, rose by 6.6% last month, against expectations for an increase of 6.5% and compared with August's 6.3% rate. The pan-European STOXX 600 index (.STOXX) slid after the report, last trading down 0.8%, having shown a daily gain of 0.8% ahead of the data.
German 10-year bond yields , which serve as the benchmark for the rest of the euro zone, came under pressure. They were last flat at 2.304%, compared with 2.229% right before the data. The Fed is expected to increase rates, which currently stand at 3.125%, by at least 75 bps next month and to continue raising them into next year. Markets show investors now expect U.S. rates to peak at around 4.85% in March, compared with a peak of 4.65% in May that was priced in right before the data.
