November 13, 2026
October’s inflation reports offered little evidence that price pressures have fully eased. The headline Consumer Price Index (CPI) increased 0.4%, above the 0.3% consensus estimate but slower than September’s 0.6% gain. Core CPI, which excludes food and energy, rose 0.3%, also exceeding expectations. Producer prices were less concerning: the headline Producer Price Index (PPI) advanced 0.3%, below the 0.4% forecast, while core PPI rose 0.3%, slowing from September. On a year-over-year basis, headline PPI reached 6.5%, up from 6.3% in September.
While inflation remains elevated, other economic indicators suggest some slowing in activity, particularly in housing and small businesses. The NFIB Small Business Optimism Index edged down to 97.8 from 97.9, slightly below expectations, while existing home sales fell 5.5% in October to an annualized 3.75 million units, compared with the 3.85 million consensus estimate. Meanwhile, Freddie Mac reported that the average 30-year fixed mortgage rate declined to 7.11% from 7.18% the previous week. Despite that recent improvement, mortgage borrowing costs remain elevated, and housing activity subdued. Together, weaker home sales and declining small business confidence point to continued softness in these sectors of the economy.
Financial markets responded to a more hawkish tone from Federal Reserve officials, with Governor Christopher Waller and Dallas Fed President Lorie Logan raising expectations for additional rate increases. Waller raised the possibility of a 50-basis-point move in December, while Logan favored at least two additional quarter-point increases. Treasury yields climbed across the curve this week. As of this writing, the 2-year stood at 4.84%, up 33 basis points for the week, and the 10-year at 5.13%, up 27 basis points, leaving the 2s/10s spread at 29 basis points. The S&P 500 nevertheless gained 2.2% as of this writing, supported by a solid third-quarter earnings season; FactSet estimated year-over-year earnings growth of 31.4%. Oil prices were relatively stable over the week but remain elevated amid ongoing geopolitical tensions and lower inventories compared with the beginning of the year. The need to rebuild inventories will likely provide a floor for prices.
Chandler expects inflation to remain a concern for the Federal Reserve, with higher energy prices and resilient economic growth both contributing to upward pressure on inflation. We anticipate two additional quarter-point rate increases, one in December and another in early 2027, although incoming economic data could influence the timing. With that outlook in mind, we continue to emphasize credit quality and liquidity while managing duration in line with each client’s investment objectives. We remain focused on opportunities that offer attractive risk-adjusted returns while maintaining flexibility as market conditions evolve.
Next Week: Empire Manufacturing, ADP Weekly Employment Change, Advanced Retail Sales, Industrial Production, Housing Starts, Building Permits, FOMC Meeting Minutes, Philadelphia Fed Business Outlook, University of Michigan Sentiment
Written by Jayson Schmitt, CFA, Co-Chief Investment Officer