Pre-market futures are up somewhat this morning, following a lighter sell-off on Thursday as NVIDIA (NVDA Quick QuoteNVDA - Free Report) news found its way into market sentiment, and major indexes sold off around -0.35%. Currently, the Dow is +284 points, the Nasdaq is +137, the S&P 500 +48 and the small-cap Russell 2000 is +18 points. Perhaps some bargain-hunters are buying back AI stocks at this hour.

Oil prices have remain muted from their recent peaks a couple weeks ago. The WTI is $88 per barrel (/bbl) presently, while Brent crude is $96/bbl. But as we will show below, lower near-term oil prices are having little effect on overall inflation. Bond yields are up on the longer end — +5.137% on the 10-year, +5.467% on the 30 — but slightly down on the 2-year yield to +4.852%.

PPI Wholesale Inflation Reaches Near 4-Year Highs

Following Wednesday’s partial Consumer Price Index (CPI) which saw near-term retail inflation up slightly from estimates, this morning we get the wholesale side of inflation: the Producer Price Index (PPI). October PPI month over month actually came in 10 basis-points (bps) down from expectations: +0.3% from +0.4%, and well down from the previous month’s unrevised +1.3%. Core month over month was in-line with estimates at +0.3%. So far, so good — right?

Not so fast: year over year PPI reached +6.5% last month, up 20 bps from the prior month and -10 bps below consensus estimates. But wholesale inflation at more than 3x the Fed’s optimal inflation rate is not a good sign for curbing inflation. A year ago, October 2025 PPI headline year over year was +2.8%. It’s also the highest rate since November of 2022, when inflation numbers were falling fast every month.

Core prints year over year tell a somewhat kinder story:  minus food and energy prices, core PPI came in-line with the prior month at +5.0%. Ex-food, energy and trade cooled slightly to +4.9% from the +5.0% for September, but these are still levels we haven’t seen since early 2023. And when you consider these figures subtract direct relations to high oil prices, we can see inflation is back with us.

Currently, Fed members are openly discussing whether a 50 bps interest rate hike at its December 8-9 meeting would be more fitting, which would bring the Fed funds rate up to +4.25-4.50%, where we haven’t been since September of last year. With employment numbers coming in strong of late and the AI infrastructure buildout likely a major agent in current inflation metrics, it will be interesting to see how the Kevin Warsh-led Fed — which was presumably going to lower rates at its earliest opportunity — will deal with present circumstances.