Week in Review…

This week’s economic data offered a multifaceted view of market sentiment as investors weighed inflation risks, interest rate expectations, and energy supply dynamics. With the Federal Reserve maintaining a cautious stance, attention turned to Treasury auctions and oil inventories for signals on how financial and commodity markets are responding to evolving macroeconomic conditions.

On November 12, the U.S. Treasury auctioned $42 billion in 10-year notes at a yield of 4.074%, with a bid-to-cover ratio of 2.43, slightly below the recent average. The muted demand suggests investors remain cautious about long-term interest rate risk, likely reflecting persistent inflation concerns and uncertainty around the Fed’s policy path.

The following day, the 30-year bond auction saw $25 billion issued at a yield of 4.694%, with a bid-to-cover ratio of 2.29. This was also below trend, reinforcing the notion that investors are hesitant to lock in capital at current long-term rates, possibly anticipating further tightening or inflation persistence.

Meanwhile, the EIA’s crude oil inventory report showed a 6.4 million barrel build, well above expectations. While gasoline and distillate inventories declined, the headline increase in crude stockpiles points to a temporary supply-demand imbalance, which could ease some inflationary pressure in energy markets.

Taken together, these indicators reflect a market grappling with elevated yields, inflation uncertainty, and shifting energy fundamentals. The soft bond auction results underscore investor wariness, while the oil inventory build may offer modest relief on the inflation front.

The upcoming week features several high-impact releases that could shape monetary policy expectations and market sentiment.

On Wednesday, November 19, the Federal Open Market Committee (FOMC) Meeting Minutes will offer insight into the Fed’s internal discussions. With inflation still elevated and labor market data softening, investors will closely examine the tone for clues on future rate decisions.

Also on Wednesday, the EIA’s crude oil inventory report will be closely watched following last week’s unexpected 6.4 million barrel build. Another increase could signal easing energy demand, while a drawdown may point to resilient consumption and renewed inflationary pressure.

On Thursday, November 20, the existing home sales report for October will provide a snapshot of housing market momentum. After a modest rebound in September, analysts expect sales to remain flat or decline slightly due to high mortgage rates and tight inventory. This data will help gauge consumer demand in one of the most rate-sensitive sectors.

Finally, on Friday, November 21, the S&P Global Flash Purchasing Managers’ Indexes (PMIs) for manufacturing and services will offer a timely read on business activity. October’s manufacturing PMI rose to 52.5, while services edged up to 54.8, both signaling modest growth. November’s data will be key in assessing whether the economy is maintaining momentum or beginning to slow under tighter financial conditions.

Together, these releases will help shape expectations for the Fed’s December meeting and broader economic trajectory.

Week in Review…

Markets absorbed a week of mixed signals, with strength in headline data masking underlying fragility and inflation trends complicating the path forward.

Labor Growth: Resilience in Headlines, Fragility Underneath

With the nonfarm payrolls report delayed, the ADP National Employment Report became the primary labor gauge. The headline numbers beat expectations, offering initial relief. However, gains were concentrated in large firms, while small and mid-sized businesses cut jobs. Despite strong headline figures, underlying labor market conditions showed signs of fragility and lacked broad-based support.

Sentiment Divergence: Services Strong, Manufacturing Weak

ISM surveys revealed a growing split in economic momentum. Manufacturing Purchasing Managers’ Index (PMI) fell deeper into contraction, signaling continued industrial weakness. In contrast, Services PMI expanded at its fastest pace since early 2023, driven by strong new orders and business activity. This resilience in services provided key market support.

Notably, the Services Employment Index remained in contraction but posted its first meaningful improvement in five months, suggesting service-sector job cuts may be slowing — a small but important sign of stabilization.

Inflationary Warnings: A Complex Price and Expectation Picture

Inflation remains the most concerning macro signal. The ISM Services Prices Paid index surged to 70.0%, its highest since October 2022, pointing to rising cost pressures in the dominant services sector. Meanwhile, the Manufacturing Prices Paid index eased, highlighting a cooling in goods inflation. This bifurcation underscores a key challenge: while goods inflation is moderating, services inflation, which is more persistent and harder to tame, is heating up.

Consumer expectations echoed this tension. The University of Michigan survey showed 1-year inflation expectations rising above forecasts, while 5-year expectations declined, suggesting longer-term inflation remains anchored. These dynamics complicate the Fed’s path to rate cuts and may keep short-term Treasury yields elevated.

Peripheral Indicators and Consumer Signals

• Consumer sentiment fell to a three-year low, hinting at weakening confidence and potential spending slowdown
• Consumer credit rose sharply, possibly reflecting short-term borrowing amid fiscal uncertainty
• Crude inventories posted a surprise surplus, signaling cooling demand and potential relief in energy prices

With the government shutdown continuing to limit official economic data, markets will turn to alternative sources for insight. Though the calendar is light, the few scheduled releases carry outsized importance, particularly those tied to global energy trends and small business sentiment.

A dominant theme this week will be oil supply and demand, with major reports from OPEC and the International Energy Agency (IEA). These monthly publications offer detailed analysis of global crude market dynamics and will be closely watched for any revisions to demand forecasts and as a proxy for broader economic activity, especially in manufacturing and travel. Domestically, the weekly crude oil inventory report will provide a near-term snapshot of U.S. supply. After last week’s unexpected inventory build, markets will look for confirmation of a cooling demand trend, which could influence price action and reinforce cautious sentiment around industrial consumption.

The NFIB Small Business Optimism Index will also be closely watched. This release is particularly relevant following ADP employment data, which showed job growth concentrated in large firms while smaller businesses reduced headcount. The NFIB reading will help clarify whether this hiring slowdown reflects economic pessimism, financial strain, or strategic shifts toward efficiency — potentially driven by technology adoption. Regardless of the cause, the index will offer valuable insight into hiring intentions within a critical segment of the U.S. economy.

Finally, scheduled Treasury auctions for 3-year, 10-year, and 30-year maturities will provide fresh signals on debt demand and yield curve dynamics. Investor appetite for long-duration bonds will be closely monitored, especially in the absence of traditional data, as it reflects market expectations for inflation, risk, and monetary policy direction.

Week in Review…

U.S. consumer confidence fell modestly in October, with The Conference Board’s headline index easing to 94.6 from a revised 95.6 in September. The decline reflected weaker expectations for business, income, and employment over the next six months, while consumers’ assessment of current conditions improved slightly. Respondents cited rising prices and the ongoing government shutdown as key sources of concern, noting that the policy uncertainty has made it harder to gauge the strength of the labor market and inflation trends. Overall, the report suggested that households remain cautious about their economic prospects heading into the final quarter of the year.

At its October meeting, the Federal Open Market Committee (FOMC) voted to cut the federal funds rate by 25 basis points to a range of 3.75%-4.00%, a move that was widely expected by financial markets. Chair Jerome Powell emphasized that while the committee saw progress on inflation and some softening in labor conditions, the Fed is not on a preset course toward further easing. He reiterated that a December rate cut is not guaranteed, highlighting the need for flexibility given the lack of comprehensive data during the government shutdown. With key economic indicators, including jobs and inflation reports, delayed, policymakers have been relying on partial and private-sector data to guide decisions. The combination of an expected cut and a cautious tone reflected a balancing act — offering modest support to the economy while maintaining vigilance against renewed inflation pressures.

In the manufacturing and business sector, the Chicago Purchasing Managers’ Index (PMI) rose to 43.8 in October from 40.6 the prior month, marking an improvement but still signaling contraction. Gains in new orders and production helped lift the index, but activity remains well below the expansion threshold of 50. The modest rebound suggests that regional manufacturing may be stabilizing after a weak summer, though continued softness points to ongoing demand challenges and cautious business sentiment.

Looking ahead, attention will turn to several key reports that will help shape expectations for the economy and future Fed policy. The Manufacturing PMI for October will offer a nationwide read on industrial activity following the tentative rebound seen in Chicago. A stronger reading would suggest that manufacturing conditions are beginning to stabilize, while continued weakness could reinforce concerns about slowing momentum.

The Job Openings and Labor Turnover Survey (JOLTS) report for September is scheduled for release, though there is uncertainty about whether it will be published given the government shutdown’s impact on data collection. If the report is delayed, investors and policymakers will likely place greater emphasis on the ADP private payrolls report, which provides an early look at labor market trends ahead of the official jobs data. Later in the week, the Services PMI for October is also due, offering insight into the larger and more resilient services side of the economy. Together, these reports will help clarify whether the U.S. economy is maintaining moderate growth or beginning to feel more pronounced effects from tighter financial conditions and fiscal disruptions.

Economic Indicators:

1. CPI: Consumer Price Index measures the average change in prices paid by consumers for goods and services over time. Source: Bureau of Labor Statistics.
2. Core CPI: Core Consumer Price Index excludes food and energy prices to provide a clearer picture of long-term inflation trends. Source: Bureau of Labor Statistics.
3. PPI: Producer Price Index measures the average change in selling prices received by domestic producers for their output. Source: Bureau of Labor Statistics.
4. Core PPI: Core Producer Price Index excludes food and energy prices to provide a clearer picture of long-term inflation trends. Source: Bureau of Labor Statistics.
5. PCE: Personal Consumption Expenditures measure the average change in prices paid by consumers for goods and services. Source: Bureau of Economic Analysis.
6. Core PCE: Core Personal Consumption Expenditures exclude food and energy prices to provide a clearer picture of long-term inflation trends. Source: Bureau of Economic Analysis.
7. Industrial Production: Measures the output of the industrial sector, including manufacturing, mining, and utilities. Source: Federal Reserve.
8. Mfg New Orders: Measures the value of new orders placed with manufacturers for durable and non-durable goods. Source: Census Bureau.
9. Durable New Orders: Measures the value of new orders placed with manufacturers of durable goods. Source: Census Bureau.
10. Durable Inventories: Measures the value of inventories held by manufacturers for durable goods. Source: Census Bureau.
11. Consumer Confidence (CB, 1985=100): Measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. Source: Conference Board.
12. ISM Manufacturing Report: Measures the economic health of the manufacturing sector based on surveys of purchasing managers. Source: Institute for Supply Management.
13. ISM Non-Manufacturing Report: Measures the economic health of the non-manufacturing sector based on surveys of purchasing managers. Source: Institute for Supply Management.
14. Leading Economic Index: Measures overall economic activity and predicts future economic trends. Source: Conference Board.
15. Building Permits (Mil. of Units, saar): Measures the number of new residential building permits issued. Source: Census Bureau.
16. Housing Starts (Mil. of Units, saar): Measures the number of new residential construction projects that have begun. Source: Census Bureau.
17. New Home Sales (Mil. of Units, saar): Measures the number of newly constructed homes sold. Source: Census Bureau.
18. SA: Seasonally adjusted.
19. SAAR: Seasonally adjusted annual rate.

Market Indices & Indicators:

1. S&P 500: A market-capitalization-weighted index of 500 leading publicly traded companies in the U.S., widely regarded as one of the best gauges of large U.S. stocks and the stock market overall.
2. Dow Jones 30: Also known as the Dow Jones Industrial Average, it tracks the share price performance of 30 large, publicly traded U.S. companies, serving as a barometer of the stock market and economy.
3. NASDAQ: The world’s first electronic stock exchange, primarily listing technology giants and operating 29 markets globally.
4. Russell 1000 Growth: Measures the performance of large-cap growth segment of the U.S. equity universe, including companies with higher price-to-book ratios and growth metrics.
5. Russell 1000 Value: Measures the performance of large-cap value segment of the U.S. equity universe, including companies with lower price-to-book ratios and growth metrics.
6. Russell 2000: A market index composed of 2,000 small-cap companies, widely used as a benchmark for small-cap mutual funds.
7. Wilshire 5000: A market-capitalization-weighted index capturing the performance of all American stocks actively traded in the U.S., representing the broadest measure of the U.S. stock market.
8. MSCI EAFE Index: An equity index capturing large and mid-cap representation across developed markets countries around the world, excluding the U.S. and Canada.
9. MSCI Emerging Market Index: Captures large and mid-cap representation across emerging markets countries, covering approximately 85% of the free float-adjusted market capitalization in each country.
10. VIX: The CBOE Volatility Index measures the market’s expectations for volatility over the coming 30 days, often referred to as the “fear gauge.”
11. FTSE NAREIT All Equity REITs: Measures the performance of all publicly traded equity real estate investment trusts (REITs) listed in the U.S., excluding mortgage REITs.
12. S&P U.S. Aggregate Bond Index: Represents the performance of the U.S. investment-grade bond market, including government, corporate, mortgage-backed, and asset-backed securities.
13. 3-Month T-bill Yield (%): The yield on U.S. Treasury bills with a maturity of three months, reflecting short-term interest rates.
14. 10-Year Treasury Yield (%): The yield on U.S. Treasury bonds with a maturity of ten years, reflecting long-term interest rates.
15. 10Y-2Y Treasury Spread (%): The difference between the yields on 10-year and 2-year U.S. Treasury bonds, often used as an indicator of economic expectations.
16. WTI Crude ($/bl): The price per barrel of West Texas Intermediate crude oil, a benchmark for U.S. oil prices.
17. Gold ($/Troy Oz): The price per troy ounce of gold, a standard measure for gold prices.
18. Bitcoin: A decentralized digital currency without a central bank or single administrator, which can be sent from user to user on the peer-to-peer bitcoin network.

This content was developed by Cambridge from sources believed to be reliable. This content is provided for informational purposes only and should not be construed or acted upon as individualized investment advice. It should not be considered a recommendation or solicitation. Information is subject to change. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The information in this material is not intended as tax or legal advice.

Investing involves risk. Depending on the different types of investments there may be varying degrees of risk. Socially responsible investing does not guarantee any amount of success. Clients and prospective clients should be prepared to bear investment loss including loss of original principal. Indices mentioned are unmanaged and cannot be invested into directly. Past performance is not a guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange.

Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, and investment advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Both are wholly-owned subsidiaries of Cambridge Investment Group, Inc. V.CIR.1125-4040

Week in Review…

The ongoing government shutdown has created a data vacuum, delaying key economic reports and clouding visibility for the Federal Reserve ahead of its next meeting. Markets now face the unenviable task of interpreting policy direction with limited official data, relying instead on supplemental and tangential indicators to gauge the economy’s trajectory.

The latest Federal Open Market Committee (FOMC) minutes offered context for the recent 25-basis point rate cut, citing a shift in the balance of risks. Policymakers noted rising downside risks to employment and fading upside risks to inflation. This suggests that concerns over a softening labor market now outweigh fears of accelerating inflation, signaling a greater willingness to move rates toward neutral if conditions deteriorate.

In the absence of federal data, markets turned to alternative reports. One of the more notable was the Consumer Credit Report, which came in well below consensus, hinting at stronger consumer balance sheets, with consumers paying down debt rather than increasing leverage. However, this data is often revised, so markets will take it with a grain of salt. Inflation signals remain mixed: the University of Michigan survey showed gradually declining expectations for both the one- and five-year periods, while the New York Fed’s consumer survey reported a modest increase in short-term expectations. Markets must contend with this ambiguity amid a backdrop of limited data.

Treasury auctions for 3-, 10-, and 30-year bonds cleared at higher yields than last month, signaling a broad upward shift in the curve. This appears driven by rising real rate expectations and a higher term premium, rather than inflation fears. The 10-Year Breakeven Inflation Rate held steady around 2.30% –2.35%, suggesting investors are demanding more compensation for duration risk amid “higher for longer” policy expectations and fiscal concerns.

With the government shutdown still in effect, markets continue to operate in a data-constrained environment. The September jobs report remains delayed, and other key releases, including weekly jobless claims and the retail sales report, are also postponed. Even the Consumer Price Index, originally scheduled for October 15, has been pushed to October 24 to support Social Security Cost-of-Living Adjustment (COLA) calculations.

In the absence of fresh government data, investors will increasingly rely on private-sector releases and Fed communications. This week features a heavy slate of speeches from Federal Reserve officials, including Vice Chair Bowman and Governor Barr. With Chair Powell’s expected departure in 2026, markets may begin shifting their attention toward the broader committee for clues on the future policy path, especially as consensus-building becomes more critical in a fragmented data environment.

Additionally, global energy reports may offer indirect insights into economic momentum. The OPEC Monthly Oil Market Report (October 13) and the IEA Monthly Oil Market Report (October 14) will provide detailed views on oil supply, demand, and pricing trends. These reports, unaffected by the shutdown, may help markets assess inflationary pressures and industrial activity through the lens of energy consumption and production.

In this environment, every speech, survey, and tangential indicator may begin to take on outsized importance as markets prepare for the Fed’s October 28–29 meeting.

Economic Indicators:

1. CPI: Consumer Price Index measures the average change in prices paid by consumers for goods and services over time. Source: Bureau of Labor Statistics.
2. Core CPI: Core Consumer Price Index excludes food and energy prices to provide a clearer picture of long-term inflation trends. Source: Bureau of Labor Statistics.
3. PPI: Producer Price Index measures the average change in selling prices received by domestic producers for their output. Source: Bureau of Labor Statistics.
4. Core PPI: Core Producer Price Index excludes food and energy prices to provide a clearer picture of long-term inflation trends. Source: Bureau of Labor Statistics.
5. PCE: Personal Consumption Expenditures measure the average change in prices paid by consumers for goods and services. Source: Bureau of Economic Analysis.
6. Core PCE: Core Personal Consumption Expenditures exclude food and energy prices to provide a clearer picture of long-term inflation trends. Source: Bureau of Economic Analysis.
7. Industrial Production: Measures the output of the industrial sector, including manufacturing, mining, and utilities. Source: Federal Reserve.
8. Mfg New Orders: Measures the value of new orders placed with manufacturers for durable and non-durable goods. Source: Census Bureau.
9. Durable New Orders: Measures the value of new orders placed with manufacturers of durable goods. Source: Census Bureau.
10. Durable Inventories: Measures the value of inventories held by manufacturers for durable goods. Source: Census Bureau.
11. Consumer Confidence (CB, 1985=100): Measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. Source: Conference Board.
12. ISM Manufacturing Report: Measures the economic health of the manufacturing sector based on surveys of purchasing managers. Source: Institute for Supply Management.
13. ISM Non-Manufacturing Report: Measures the economic health of the non-manufacturing sector based on surveys of purchasing managers. Source: Institute for Supply Management.
14. Leading Economic Index: Measures overall economic activity and predicts future economic trends. Source: Conference Board.
15. Building Permits (Mil. of Units, saar): Measures the number of new residential building permits issued. Source: Census Bureau.
16. Housing Starts (Mil. of Units, saar): Measures the number of new residential construction projects that have begun. Source: Census Bureau.
17. New Home Sales (Mil. of Units, saar): Measures the number of newly constructed homes sold. Source: Census Bureau.
18. SA: Seasonally adjusted.
19. SAAR: Seasonally adjusted annual rate.

Market Indices & Indicators:

1. S&P 500: A market-capitalization-weighted index of 500 leading publicly traded companies in the U.S., widely regarded as one of the best gauges of large U.S. stocks and the stock market overall.
2. Dow Jones 30: Also known as the Dow Jones Industrial Average, it tracks the share price performance of 30 large, publicly traded U.S. companies, serving as a barometer of the stock market and economy.
3. NASDAQ: The world’s first electronic stock exchange, primarily listing technology giants and operating 29 markets globally.
4. Russell 1000 Growth: Measures the performance of large-cap growth segment of the U.S. equity universe, including companies with higher price-to-book ratios and growth metrics.
5. Russell 1000 Value: Measures the performance of large-cap value segment of the U.S. equity universe, including companies with lower price-to-book ratios and growth metrics.
6. Russell 2000: A market index composed of 2,000 small-cap companies, widely used as a benchmark for small-cap mutual funds.
7. Wilshire 5000: A market-capitalization-weighted index capturing the performance of all American stocks actively traded in the U.S., representing the broadest measure of the U.S. stock market.
8. MSCI EAFE Index: An equity index capturing large and mid-cap representation across developed markets countries around the world, excluding the U.S. and Canada.
9. MSCI Emerging Market Index: Captures large and mid-cap representation across emerging markets countries, covering approximately 85% of the free float-adjusted market capitalization in each country.
10. VIX: The CBOE Volatility Index measures the market’s expectations for volatility over the coming 30 days, often referred to as the “fear gauge.”
11. FTSE NAREIT All Equity REITs: Measures the performance of all publicly traded equity real estate investment trusts (REITs) listed in the U.S., excluding mortgage REITs.
12. S&P U.S. Aggregate Bond Index: Represents the performance of the U.S. investment-grade bond market, including government, corporate, mortgage-backed, and asset-backed securities.
13. 3-Month T-bill Yield (%): The yield on U.S. Treasury bills with a maturity of three months, reflecting short-term interest rates.
14. 10-Year Treasury Yield (%): The yield on U.S. Treasury bonds with a maturity of ten years, reflecting long-term interest rates.
15. 10Y-2Y Treasury Spread (%): The difference between the yields on 10-year and 2-year U.S. Treasury bonds, often used as an indicator of economic expectations.
16. WTI Crude ($/bl): The price per barrel of West Texas Intermediate crude oil, a benchmark for U.S. oil prices.
17. Gold ($/Troy Oz): The price per troy ounce of gold, a standard measure for gold prices.
18. Bitcoin: A decentralized digital currency without a central bank or single administrator, which can be sent from user to user on the peer-to-peer bitcoin network.

This content was developed by Cambridge from sources believed to be reliable. This content is provided for informational purposes only and should not be construed or acted upon as individualized investment advice. It should not be considered a recommendation or solicitation. Information is subject to change. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The information in this material is not intended as tax or legal advice.

Investing involves risk. Depending on the different types of investments there may be varying degrees of risk. Socially responsible investing does not guarantee any amount of success. Clients and prospective clients should be prepared to bear investment loss including loss of original principal. Indices mentioned are unmanaged and cannot be invested into directly. Past performance is not a guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange.

Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, and investment advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Both are wholly-owned subsidiaries of Cambridge Investment Group, Inc. V.CIR.1025-3773