Hot October CPI Lifts Yields, Weighs on Stocks

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Hot October CPI Lifts Yields, Weighs on Stocks

19,750 ADP Employment Change0.30 Core Inflation Rate"" Core Inflation Rate0.40 Inflation Rate"" Inflation Rate

S&P 5007,520.93-0.38%

US 10Y Treasury4.98%+10 bp

WTI Crude86.79+0.87%

Gold4,061.90+0.79%

Market Snapshot

Asset	Level	Change
S&P 500	7,520.93	-0.38%
Nasdaq 100	27,740.79	-0.60%
Dow Jones	52,231.89	-0.30%
Russell 2000	2,821.38	-0.68%
USD/JPY	159.11	+0.71%
EUR/USD	1.11	-0.74%
GBP/USD	1.33	-0.94%
Gold	4,061.90	+0.79%
WTI Crude	86.79	+0.87%
Bitcoin	73,960.40	+0.33%
US 2Y Treasury	4.73%	+17 bp
US 10Y Treasury	4.98%	+10 bp

Prior Economic Events

Data	Prior	Cons	Actual
Fed Goolsbee Speech	-	-	-
Speech by Fed's Waller	-	-	-
ADP Employment Change Weekly	16,750	-	19,750
Core Inflation Rate Month-over-Month	0.30	0.20	0.30
Core Inflation Rate Year-over-Year	2.60	2.80	""
Inflation Rate Month-over-Month	0.60	0.30	0.40
Inflation Rate Year-over-Year	3.70	3.90	""
CPI s.a	336.30	-	337.48
Consumer Price Index	336.94	337.02	337.51
Speech by Fed's Logan	-	-	-

Today's Economic Events

Data	Prior	Cons	Time
MBA 30-Year Mortgage Rate	7.30	-	07:00

Thursday (2026-11-12)
Weekly Jobless Claims	189,000	195,000	08:30
Fed Hammack Speech	-	-	09:00
Existing Home Sales	4.0m	4.0m	10:00
Existing Home Sales Month-over-Month	1.50	-	10:00
Speech by Fed's Barr	-	-	10:00
Fed Goolsbee Speech	-	-	11:30
EIA Weekly Crude Oil Inventory	-865,000	-1.1m	12:00
EIA Weekly Gasoline Inventory	-222,000	-100,000	12:00

October CPI rose 0.4% m/m, above the 0.3% consensus, with core CPI at 0.3% m/m versus 0.2% expected, keeping headline inflation on a firm trajectory.
Treasury yields jumped sharply, with the 2-year up 17 bp to 4.73% and the 10-year up 10 bp to 4.98%, as markets priced a firmer Fed path.
Equities softened across the board, with the S&P 500 down 0.38% and the Nasdaq 100 off 0.60%, while the dollar strengthened against major crosses.

Yesterday's Recap

October CPI printed hotter than expected, with the headline index up 0.4% m/m against a 0.3% consensus and core CPI at 0.3% m/m versus 0.2% expected, while the seasonally adjusted CPI level rose to 337.48 from 336.30. The elevated core reading keeps inflation sticky well above target and complicates the Fed's restrictive stance following its September hike. ADP's weekly employment change came in at 19,750, up from the prior 16,750, suggesting the labor market remains resilient.

Markets reacted decisively: the 2-year Treasury yield jumped 17 bp to 4.73% and the 10-year rose 10 bp to 4.98%, reflecting higher expected policy rates. Equities sold off, with the S&P 500 down 0.38% to 7,520.93, the Nasdaq 100 off 0.60%, and the Russell 2000 down 0.68% as rate-sensitive small caps underperformed. The dollar firmed, with USD/JPY up 0.71% to 159.11 and EUR/USD down 0.74% to 1.11, while gold rose 0.79% to $4,061.90 and WTI gained 0.87% to $86.79.

API weekly crude stocks showed a build of 9 million barrels against a 1 million draw expected.

The Day Ahead

Markets observe the Veterans Day holiday, with Treasury cash markets closed and no major federal data releases scheduled, leaving the CPI-driven repricing to settle without fresh catalysts. Attention turns to Thursday's flow of releases, including weekly jobless claims and any scheduled Fed communications, which will be scrutinized for signals on whether the hot October print alters the committee's December posture. With the next FOMC meeting set for December 9, the coming sessions will be dominated by Fed speak and inflation-expectation surveys as investors recalibrate the odds of further tightening.

Liquidity will be thinner on the holiday, so any moves in futures should be read with caution.

Other Economic Notes

The October CPI surprise reinforces the broader picture of persistent inflation pressure, with core prices running at a pace inconsistent with a rapid return to target. The labor market continues to show resilience, underscored by the ADP weekly gain of 19,750, which supports the case for the Fed maintaining a restrictive stance. ↓ p.2

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Other Economic Notes (continued)

With GDP growth running at 3.40% QoQ SAAR in Q2 and retail sales up 6.29% y/y in September, demand conditions remain firm enough to sustain pricing power. Unemployment at 4.10% in October suggests the labor market is cooling only gradually, keeping wage-driven inflation risks alive. The combination of solid activity and sticky prices argues against premature easing.

Global Macro News

Global markets are recalibrating in the wake of the hot US inflation report, with European and Asian equities under pressure as higher US rates tighten global financial conditions. The Bank of Canada's recent rate hike into a stalling economy highlights a broader theme of central banks grappling with inflation persistence amid slowing growth. Germany's economy is reportedly rebounding faster than expected, though structural reforms remain necessary, per Bundesbank President Nagel, offering a modest offset to euro-area weakness.

The dollar's strength, with EUR/USD down 0.74% and GBP/USD off 0.94%, is transmitting tighter conditions to emerging markets and commodity importers. Oil prices remain elevated, with WTI at $86.79, adding to global inflation pressures. Trade tensions persist, with the US extending its intellectual property probe into Vietnam by three months, keeping supply-chain uncertainty in play.

Fed Watch

The Fed's most recent decision on October 28 was to hold the target range at 3.75-4.00%, following a 25 bp hike at the September 16 decision that lifted the funds rate to 4.00%. ↓ p.3

Continuation

Fed Watch (continued)

The hot October CPI print has reinforced the case for the committee's restrictive stance, with markets now pricing a firmer path and Goldman Sachs revising its forecast toward additional tightening. Fed speakers this week — including Goolsbee, Waller, Logan, Bowman, and Schmid — will be closely watched for guidance on whether the December 9 meeting could deliver another hike. The 2-year yield's 17 bp jump to 4.73% signals that investors are repricing the near-term policy path higher, while the 10-year at 4.98% reflects elevated term premium and inflation risk.

With core inflation running at 0.3% m/m, the committee has little room to signal easing, and any future rate reduction would represent a reversal of the September hike rather than a new easing cycle. The burden of proof now shifts to the data to justify a pause or a further move in December.

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