Key Takeaways
- CPI Inflation and Jobless Claims Both Come in Lower than Expected
- Pre-market Futures Gain Substantially on the News
- Will Bullish Sentiment Return Today? What's to Stop It?
Thursday, December 18, 2025
The final big economic shoe to drop this week did so in pleasing fashion: the Consumer Price Index (CPI) report for November came in below expectations in a big way: +0.2% on headline and core (subtracting volatile food and energy prices) are below the +0.3% expected for both prints, which were where we left off these figures in September. (CPI for October has been scrapped.)
Year over year headline CPI is also known as the Inflation Rate, and this came in surprisingly low: +2.7%, from a consensus expectation of +3.1%. This is also the first month-over-month* print lower in eight months, going back to April’s 4 1/2-year low of +2.3%. Core CPI year over year came down to +2.6% — also surprising considering expectations of +3.0%.
We saw Energy prices rise +1.1% over this two-month interim, which is good news if we consider that Energy prices have come down more recently, and stand to post even lower figures in the next CPI report. Food was +0.1% and Shelter +0.2% — both agreeable to market participants looking for signs that inflation is on the wane. Lodging away from home, Recreation and Apparel all came down in price over this two-month stint.
Weekly Jobless Claims Stay in Comfortable Range
As with today’s CPI data, Weekly Jobless Claims are also coming in as well as can be expected: Initial Claims came in at +224K for last week, down nicely from the upwardly revised +237K the prior week. The 4-week average now stands at very reasonable +217K, based on a big dip to sub-200K a couple weeks ago. Again, it would be hard to wish for data better than this.
Continuing Claims came up to 1.897 million from a downwardly revised 1.830 million the previous week, which marked another big shift downward — -100K long-term jobless claims over a one-month period — after spending 28 weeks at or above 1.9 million (without once ever striking 2 million, which would have caused a re-think on labor force strength). Sub-1.9 million is another very agreeable place to be on labor metrics.
These figures only jibe with the weakness we’ve seen in monthly job hires (such as the BLS report for November out on Tuesday) if we view it through the prism of “no hire, no fire.” This illustrates a lack of clarity on the economic landscape looking toward 2026; we expect to see labor numbers in limbo like this until it’s clear whether we’ll enjoy economic expansion or prepare for contraction.
What to Expect from the Stock Market Today
Pre-market futures zoomed up from already-improved levels across the major indexes. The Dow moved from +100 points ahead of these reports to +215 points now; the S&P 500 moved from +41 to +53 after the metrics dropped, and the Nasdaq was +280 points ahead of the news to +344 afterward. Bond yields have moderated to +4.12% on the 10-year and +3.46% on the 2-year.
It’s an excellent way to prime the pump after a week or so of downward moves on the major stock indexes. Assuming there’s not somehow a third shoe dropping at some point during this trading day, we find it hard to recognize any headwinds for trading these indexes higher based on today’s employment and inflation data.
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* - Keep the October absence of data in mind when we cite “month over month” numbers.
Questions or comments about this article and/or author? Click here>>
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CPI, Jobless Claims in Very Agreeable Ranges
Key Takeaways
Thursday, December 18, 2025
The final big economic shoe to drop this week did so in pleasing fashion: the Consumer Price Index (CPI) report for November came in below expectations in a big way: +0.2% on headline and core (subtracting volatile food and energy prices) are below the +0.3% expected for both prints, which were where we left off these figures in September. (CPI for October has been scrapped.)
Year over year headline CPI is also known as the Inflation Rate, and this came in surprisingly low: +2.7%, from a consensus expectation of +3.1%. This is also the first month-over-month* print lower in eight months, going back to April’s 4 1/2-year low of +2.3%. Core CPI year over year came down to +2.6% — also surprising considering expectations of +3.0%.
We saw Energy prices rise +1.1% over this two-month interim, which is good news if we consider that Energy prices have come down more recently, and stand to post even lower figures in the next CPI report. Food was +0.1% and Shelter +0.2% — both agreeable to market participants looking for signs that inflation is on the wane. Lodging away from home, Recreation and Apparel all came down in price over this two-month stint.
Weekly Jobless Claims Stay in Comfortable Range
As with today’s CPI data, Weekly Jobless Claims are also coming in as well as can be expected: Initial Claims came in at +224K for last week, down nicely from the upwardly revised +237K the prior week. The 4-week average now stands at very reasonable +217K, based on a big dip to sub-200K a couple weeks ago. Again, it would be hard to wish for data better than this.
Continuing Claims came up to 1.897 million from a downwardly revised 1.830 million the previous week, which marked another big shift downward — -100K long-term jobless claims over a one-month period — after spending 28 weeks at or above 1.9 million (without once ever striking 2 million, which would have caused a re-think on labor force strength). Sub-1.9 million is another very agreeable place to be on labor metrics.
These figures only jibe with the weakness we’ve seen in monthly job hires (such as the BLS report for November out on Tuesday) if we view it through the prism of “no hire, no fire.” This illustrates a lack of clarity on the economic landscape looking toward 2026; we expect to see labor numbers in limbo like this until it’s clear whether we’ll enjoy economic expansion or prepare for contraction.
What to Expect from the Stock Market Today
Pre-market futures zoomed up from already-improved levels across the major indexes. The Dow moved from +100 points ahead of these reports to +215 points now; the S&P 500 moved from +41 to +53 after the metrics dropped, and the Nasdaq was +280 points ahead of the news to +344 afterward. Bond yields have moderated to +4.12% on the 10-year and +3.46% on the 2-year.
It’s an excellent way to prime the pump after a week or so of downward moves on the major stock indexes. Assuming there’s not somehow a third shoe dropping at some point during this trading day, we find it hard to recognize any headwinds for trading these indexes higher based on today’s employment and inflation data.
______
* - Keep the October absence of data in mind when we cite “month over month” numbers.
Questions or comments about this article and/or author? Click here>>