Bond Yields Rise Slightly Amid Cooler-Than-Expected November CPI Data

This analysis draws from a CNBC report [1] dated December 19, 2025, which covered rising bond yields following the release of the November 2025 CPI data (released the prior day). The CPI data showed consumer prices increasing 2.7% year-over-year (YoY), below the 3.1% consensus forecast, with core CPI (excluding food and energy) at 2.6% YoY (vs. 3.0% expected) [0]. Normally, cooler inflation reduces expectations of interest rate hikes, leading to lower bond yields. However, the 10-year Treasury yield (^TNX) rose slightly by 3 basis points from 4.12 on December 18 to 4.15 on December 19 [0]. This counterintuitive movement may be attributed to technical market factors, uncertainty from a 43-day government shutdown that delayed data release, or potential reliability concerns with the CPI report [0]. In contrast, U.S. stock indices reacted positively: the S&P 500 (^GSPC) rose 0.62%, the NASDAQ Composite (^IXIC) 0.80%, and the Dow Jones Industrial Average (^DJI) 0.33% on December 19 [0]. This divergence indicates the stock market prioritized expectations of future Federal Reserve interest rate cuts over short-term yield volatility.

1. Divergent Market Responses
   : Bond yields and equities exhibited contrasting reactions to the CPI data, highlighting varying market interpretations of inflation trends and policy implications.
2. Data Reliability Concerns
   : The government shutdown disrupted CPI data collection, leading to delays and potential unreliability, which may have contributed to the unexpected yield movement.
3. Inflation Trajectory Focus
   : Economists anticipate inflation will accelerate in December [0], creating uncertainty about the sustainability of the current cooling trend and its impact on Fed policy.

• Risks
  :
  • Data Uncertainty
    : Delayed and potentially unreliable economic data from the government shutdown could increase market volatility as investors seek clear signals [0].
  • Inflation Rebound
    : Expected December inflation acceleration may dampen rate cut expectations, potentially weighing on both bond and stock markets [0].
  • Fed Policy Volatility
    : Shifts in Fed officials’ comments regarding future interest rates could lead to sudden market fluctuations [0].
• Opportunities
  :
  • Rate Cut Tailwinds
    : The cooling inflation trend supports the case for future Fed rate cuts, which could provide sustained support for equities if inflation remains under control [0].

• Event
  : CNBC reported rising bond yields after CPI data release on December 19, 2025 [1].
• CPI Data
  : November 2025: 2.7% YoY (vs. 3.1% expected); Core CPI: 2.6% YoY (vs. 3.0% expected) [0].
• Bond Yields
  : 10-year Treasury yield (^TNX) +3 basis points (4.12 → 4.15) on December 19 [0].
• Stock Markets
  : S&P 500 (^GSPC) +0.62%, NASDAQ (^IXIC) +0.80%, Dow Jones (^DJI) +0.33% on December 19 [0].
• Context
  : 43-day government shutdown delayed data release; December inflation expected to accelerate [0].