Goldman's Qubbaj on Why October CPI Just Revived a 50bp Fed Hike
As seen on the 24/7 Wall St. homepage on November 13, 2026.
How Will Higher-than-Expected Inflation Data Impact the Fed's Next Rate Decisions?
- October CPI at +0.3% for a third straight month reopened the door to a 50bp December hike
- Waller's pre-CPI speech explicitly made 50bp contingent on a 0.3 reading
- Oil down roughly 15% in November won't give the Fed cover, Qubbaj says
- Base case: 10-year yield stays below the ~5.3% high; own mega-cap tech, rent puts as hedges
Goldman's rates trading co-head is telling clients the market spent a month pricing out nearly 50 basis points of hikes and just gave it back in a day. If he is right that 10-year yields hold under the 5.3% peak while the Fed goes bigger in December, the pain sits in over-levered balance sheets while mega-cap tech keeps driving the tape.
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October CPI at plus 0.3% for a third consecutive month handed back nearly 50 basis points of rate-hike expectations markets had spent the prior month pricing away. Muhammad Qubbaj of Goldman Sachs made that point to clients on the November 12 episode of The Markets podcast.
The 50-basis-point scenario for the Fed's December meeting is not theoretical, because Fed Governor Waller had told markets that a 0.3% reading would be the threshold for considering a larger hike.
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The offset some investors counted on, a drop in oil prices through November, is unlikely to give the Fed cover to look past the inflation number, Qubbaj argues. Its focus on stickier components of CPI means lower energy costs do not translate into a softer policy stance.
Qubbaj's base case is that the 10-year Treasury yield holds below its recent high of approximately 5.3%. He favors owning mega-cap technology stocks with put options as hedges, capturing upside while limiting exposure if yields breach that ceiling.
