The Federal Reserve’s next move looks increasingly like a rate hike, and Friday’s producer price report will help show how strong that case is. The October Producer Price Index, which tracks what businesses receive for goods and services, is due at 8:30 a.m. ET on Friday, according to economic calendars from Analytics Insight and Delta Exchange.
How we got here
Two reports in quick succession changed the conversation. First, the October jobs report showed employers added 165,000 jobs, well above the roughly 65,000 economists expected, and the unemployment rate dipped to 4.1%, according to Kitco. Then on Tuesday, the Consumer Price Index rose 0.4% in October, above forecasts for 0.3%, while core prices excluding food and energy climbed 0.3% versus 0.2% expected, according to Kitco, Yahoo Finance and CoinDesk.
One quirk: the government did not publish a year-over-year CPI comparison, because the October 2025 government shutdown prevented normal data collection a year ago, according to Kitco and Yahoo Finance.
What markets are pricing
The Fed’s target range currently sits at 3.75% to 4.00%. After the CPI data, futures markets put the odds of a quarter-point hike at the December 8-9 meeting at roughly 85% to 88%, with the rest on a larger half-point move, according to Kitco and CoinDesk citing CME FedWatch.
Bond yields have responded. The 10-year Treasury yield briefly topped 5% on Tuesday, according to Kitco and CoinDesk, and was quoted near that level in Thursday’s early trading, according to Yahoo Finance data. Higher yields ripple through mortgage rates, auto loans and corporate borrowing costs.
Fed voices
Fed Governor Christopher Waller has signaled support for a December increase and said a larger move could be appropriate if underlying inflation pressure stays elevated, according to Kitco and Yahoo Finance. Richmond Fed President Tom Barkin struck a more patient tone, saying policymakers should weigh incoming data before deciding, Kitco reported.
What to watch next
- Friday: October PPI. A hot reading would reinforce the case for a hike, while a soft one could ease pressure on the larger move.
- Tuesday, Nov. 17: October retail sales, a read on whether consumers are still spending.
- Wednesday, Nov. 18: Minutes from the Fed’s October meeting, where two policymakers favored an immediate hike, according to Kitco.
For households, the takeaway is that borrowing costs may stay higher for longer than many expected earlier this year, while savers continue to earn more on cash and bonds.
