Two-fer Tuesday: CPI, small business sentiment
SPY•U.S. consumer prices rose 0.4% in October, above the 0.3% forecast, while core CPI increased 0.3%. The NFIB Optimism Index slipped 0.1 point to 97.8, and U.S. stock indexes fell as Treasury yields rose.
1. Inflation runs hotter than expected
The Consumer Price Index rose 0.4% in October, easing from September’s 0.6% increase but exceeding analysts’ 0.3% forecast. Core CPI, which excludes food and energy, rose 0.3%, above the 0.2% consensus and matching September’s rate. Year-on-year figures were unavailable.
2. Rates and markets react
A market economist said the data was hotter than expected and suggested a December rate hike was on its way. Markets had priced in a 98% likelihood of a 25-basis-point hike before the report; afterward, the probability of a 50-basis-point increase rose to 15%. U.S. equity indexes fell, the Nasdaq was down about 1%, and the 10-year Treasury yield rose to about 4.99%.
3. Small business outlook
The NFIB Optimism Index fell 0.1 point to 97.8, just below its 52-year average of 98. The Uncertainty Index dropped six points to its lowest level since December 2025. The share of respondents planning to raise prices reached its highest level since June 2022.
