November CPI Report Delivers Softer-Than-Forecast Inflation Signals

The economic calendar’s most anticipated release this week brought relief to market watchers: Consumer Price Index (CPI) readings for November printed significantly cooler than consensus estimates. Both headline and core inflation—which strips out volatile commodities—rose just +0.2% month-over-month, undercutting the +0.3% forecasts economists had been anticipating since September. (Note: October CPI data was not released.)

The year-over-year Inflation Rate headline metric proved even more impressive, landing at +2.7% versus the anticipated +3.1% consensus call. This marks the first time monthly CPI ticked lower since April, when inflation stood at a 4.5-year nadir of +2.3%. Core CPI’s annual reading similarly surprised to the downside, settling at +2.6% compared to expectations of +3.0%.

Breaking down the components: Energy prices climbed +1.1% over the two-month span—favorable news given that recent energy trends have trended lower, positioning the next CPI release for even softer figures. Food costs advanced merely +0.1%, while Shelter rose +0.2%, both welcome signals for those monitoring disinflation momentum. Secondary categories including Lodging, Recreation, and Apparel all retreated in price during this period.

Labor Market Maintains Steady Footing Amid Economic Uncertainty

Complementing the benign inflation picture, the Weekly Jobless Claims data streamed in constructively. Initial Claims dropped to 224,000 for the prior week, down meaningfully from the upwardly revised 237,000 previously recorded. The four-week moving average now sits at a reasonable 217,000, supported by a dip below 200,000 a fortnight earlier.

Continuing Claims rose to 1.897 million from a downwardly revised 1.830 million, reflecting a substantial -100,000 shift in long-term unemployment over a one-month window. This represents a notable improvement after 28 consecutive weeks hovering at or above the 1.9 million level (notably never breaching 2 million, which would have prompted reassessment of labor strength). Maintaining sub-1.9 million levels continues to paint an encouraging backdrop for employment metrics.

The apparent tension between softer monthly hiring data and stable jobless claims suggests a “no hire, no fire” labor market dynamic—reflecting genuine uncertainty about the economic trajectory heading into 2026. Market participants anticipate labor figures will likely remain range-bound until visibility clarifies whether the economy will expand or contract.

Stock Futures Rally on Softer Inflation and Stable Employment Picture

Equities responded enthusiastically to this favorable data cascade. Pre-market index futures extended gains from already-elevated levels across major benchmarks. The Dow advanced from +100 points to +215 points post-release; the S&P 500 climbed from +41 to +53; and the Nasdaq jumped from +280 to +344 points. Treasury yields compressed modestly, with the 10-year settling at +4.12% and the 2-year at +3.46%.

This positive technical setup arrives after a week of downward pressure across major stock indices, providing meaningful momentum heading into the trading day. Barring unexpected developments, today’s inflation and employment metrics appear likely to sustain upside pressure on equity valuations.