NY Fed Survey: Stable Inflation Expectations, Improved Labor Outlook Impact Markets

The New York Fed’s November 2025 Survey of Consumer Expectations (SCE), released on December 8, 2025 [0], revealed two core findings: (1) inflation expectations stayed unchanged at 3.2% (1-year horizon) and 3.0% (3/5-year horizons) – still above the Fed’s 2% target; (2) the labor market outlook improved, with consumers reporting lower unemployment expectations for the year ahead [0]. CNBC reported on the survey’s release, highlighting these key metrics [1].

Market reactions were mild but mixed: U.S. major equity indices (S&P 500, NASDAQ, Dow) declined 0.46-0.51% [0], the 10-year Treasury yield rose slightly by ~0.4-1 basis points [0], and market expectations for a 25 bps Fed rate cut in December 2025 remained elevated at ~87% [0]. Analysts attribute this activity to anticipation of the upcoming FOMC meeting, as investors consolidated gains after recent upward trends [0].

1. Stable inflation expectations
   (above target but not rising) suggest consumers do not fear near-term inflation spikes, supporting ongoing rate cut expectations [0].
2. An
   improved labor outlook
   signals economic resilience, which may make the Fed more cautious about aggressive rate cuts beyond December, even as inflation stays stable [0].
3. Mild market movements
   reflect investor uncertainty ahead of the FOMC meeting, balancing the survey’s mixed implications (stable inflation vs. improved labor) with existing rate cut bets [0].

• Risks
  : Elevated volatility is likely ahead of the FOMC meeting, as unexpected Fed decisions (e.g., delaying rate cuts) could trigger larger market swings. Gaps in survey details (e.g., job finding rates, earnings growth expectations) also leave incomplete economic context [0].
• Opportunities
  : Equity market consolidation after recent gains may present entry points if the Fed meets market expectations for a December rate cut [0].

The NY Fed’s November 2025 SCE showed stable inflation expectations (above 2% target) and an improved labor market outlook. U.S. equities declined slightly, 10-year Treasury yields rose marginally, and Fed rate cut expectations for December remained high (~87%). Market activity is driven by FOMC meeting anticipation and recent gain consolidation. Investors should monitor upcoming Fed decisions and full survey details for a complete economic picture.