From the Desk - Economic Commentary
Scott Hofer, Member Strategies Manager - 11/10/2026
U.S. markets opened this morning with a weaker tone in stocks and a notable selloff in Treasuries, as investors reacted to hotter-than-expected October inflation data. The S&P 500 and Dow came under pressure, while technology shares showed relative strength following Monday’s sharp rally. In fixed income, the 10-year Treasury yield climbed about 9 basis point to roughly 4.97%–4.98% while the 2-year yield also moved higher, reflecting a broad repricing toward tighter monetary policy. The catalyst was October CPI, where both headline and core inflation reportedly exceeded expectations, reinforcing concerns that inflation remains too persistent for the Federal Reserve to ease policy aggressively. Those concerns were amplified by hawkish comments from Fed Governor Waller supporting a potential 25-basis-point December rate increase, with scope for more tightening if inflation remains elevated.
This morning’s October Consumer Price Index report showed inflation remained somewhat hotter than expected with headline CPI increasing 0.4% month over month, down from September’s 0.6% increase but above the 0.3% consensus forecast, while core CPI rose 0.3%, also exceeding expectations of 0.2%. Food prices increased 0.5%, energy rose 0.7%, and shelter increased 0.3%, with shelter accounting for more than 30% of the overall monthly CPI increase. The Bureau of Labor Statistics did not publish year-over-year headline or core CPI rates because the 2025 government shutdown prevented collection of October 2025 data needed for the comparison.
The ADP NER Pulse showed U.S. private employers added an average 19,750 jobs per week during the four weeks ending October 24, up slightly from 19,500 for the four weeks ending October 17 and 16,750 for the period ending October 10. ADP characterized the result as the second consecutive week of strengthening hiring, suggesting private-sector labor demand has regained some momentum after weakening earlier in October. The figures are seasonally adjusted four-week moving averages and carry a two-week reporting lag, so they are better viewed as a high-frequency trend indicator than a single-week payroll estimate.
The NFIB Small Business Optimism Index edged down 0.1 point to 97.8 in October, from 97.9 in September, leaving sentiment just below its long-term average of 98.0. The details were mixed but somewhat encouraging with a net 8% of owners expect business conditions to improve over the next six months, while 11% said it is a good time to expand, up four points from September. Labor remains a major constraint, with 36% reporting job openings they could not fill and 25% citing labor quality or availability as their most important problem. Additionally, 21% of owners reported concerns of taxes jumping sharply, the highest since May 2021, while the NFIB Uncertainty Index fell six points to 84, its lowest level since December 2025.
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