Weekly Market Commentary November 10, 2025
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
Click HERE to read more.