Inflation Turned Back Up: Charts and Chat, November 1, 2026

Core PCE inflation has stopped falling and turned back up to about 3%, against the Fed’s 2% target, and that leaves the Fed without an easy decision. “It’s putting the Fed in a little bit of a box,” said Eric C. Boyce, CFA, President, CEO and Chief Investment Officer of Boyce & Associates Wealth Consulting, in the November 1, 2026 edition of Charts and Chat. 



The arguments on both sides are compelling. Inflation is rising while the labor market is still broadly healthy, yet the Inflation Shock Momentum Index, a measure of inflation shock risk the Fed does not formally watch, has been easing for months. Each argument has data behind it. Meanwhile, the bond market stopped waiting and repriced on its own: the 10-year Treasury yield rose above 5% and fell back below it within weeks.

Boyce runs portfolio strategy at Boyce & Associates, a fee-based fiduciary firm in Cedar Park, Texas, that serves business owners, retirees and high-net-worth families. Each weekly review covers the economy first, then the market. This week’s pack covered six areas: inflation, the household balance sheet, growth and the policy path, rents and uncertainty, what a competitive moat is, and the dispersion underneath an index that sold off.

Inflation Stopped Falling and Started Rising

The pack opened on core personal consumption expenditures, and the chart title did the work: inflation stopped falling; now it is rising. The series sits near 3% year over year, above the 2% line it has not touched since 2021.

Boyce framed the Fed's problem as a genuine two-sided argument rather than a close call. On one side, the rise could be energy working through the economy, with diesel the channel he named. On the other, it could be something more systemic arriving while the labor market is still broadly healthy. "The widespread consensus is the Fed's going to raise rates one more time this year," he said, with some estimates pointing to the Fed then holding for the balance of 2027.

The decomposition supports the ambiguity rather than resolving it. Supply-driven and demand-driven inflation have both contributed, and the portion the model cannot attribute to either has ticked up. Boyce was careful about proportion: inflation is moving higher, "but it's not egregiously higher yet, and it hasn't shown signs of acceleration."

Against that, the Inflation Shock Momentum Index, built by Lansing and Shapiro at the Federal Reserve Bank of San Francisco and running through September 2026, has turned negative for several consecutive months. "Those potential pressures are waning," Boyce said, "which should give them perhaps some cover to go ahead and raise rates once, and then remain on hold for a while."

The Household Picture Is Better Than the Mood

Two charts in this block describe a household sector in better shape than the prevailing mood suggests.

Consumer spending growth is broad-based across income groups. All three cohorts, above $100,000, $50,000 to $100,000, and below $50,000, converge near 4% to 5% year over year in 2026, and the lowest income band is not the weakest.

Boyce read the level rather than the gap. "The rate of growth is still not terribly low," he said, pointing out that pre-pandemic spending growth ran below where it sits now.

Household net worth tells a similar story. Measured as change since the first quarter of 2019, the top 1% is up roughly 98%, the 80th to 99th percentile roughly 83%, and the bottom 20% roughly 80%. Boyce did not present that as an absence of stress. Credit card balances are rising, auto loan delays are appearing, and delinquencies and defaults have gone up, without what he called a massive amount of credit stress. Growth in the bottom 20% is real, and it is the slowest of the three.

The third chart in the block is the one with a date on it. The Old-Age and Survivors Insurance Trust Fund balance, measured as a share of one year's benefit costs, peaked above 400% around 2011, sits near 175% now, and is forecast to reach zero in 2032.

Boyce named the two levers without endorsing either: the income cap above which Social Security tax stops applying, and the retirement age and eligibility rules. "I do think that both of those are going to be discussed considerably over the coming years." For households within a decade of claiming, that timeline belongs in a financial planning projection rather than in the news cycle.

The Bond Market Moved Before the Fed Did

Two services measures of inflation, both stripped of housing, sat at 3.13% for CPI supercore and 3.60% for PCE core services as of late October. Boyce read them together as evidence that the disinflation has stalled rather than reversed violently: "we have certainly attenuated the decline in inflation."

Then the chart that gave the week its sharpest framing, titled "It's the Bond Market, Stupid".

The 10-year sold off hard, peaked above 5%, and has since reversed back below it. "This is as remarkable as we've seen it in quite a while," Boyce said. The implicit October 2027 Fed funds rate, which had pushed toward 4.75%, now sits near 4.5%. The sequencing is the point: expectations for policy are following the long bond, not leading it.

The block closed on a longer view of the same force. In purchasing power, a 1913 dollar was worth about three cents at the time of the pack, a roughly 97% decline since the Federal Reserve was founded. The chart splits the period into eras with compound average inflation of 1.9% a year through the world wars and Depression, 3.1% under Bretton Woods, and 3.9% since the end of gold convertibility in 1971.

"It takes about $33 today to buy what $1 bought back in 1913," Boyce said.

Growth Beat, Income Did Not

Third-quarter GDP came in at 3.4% annualised against a 3.2% estimate. The composition matters more than the beat: inventory build contributed, consumption carried most of it, business investment and government spending added, and net trade subtracted, driven by imports and technology imports in particular.

Real final sales to private domestic purchasers, which strips out inventories and trade to isolate underlying private demand, ran at 4.9%. Boyce called it a handy index and read it as a signal for the quarter ahead rather than the one just reported.

The Atlanta Fed's first Q4 estimate at 3.2% implies flat but elevated growth against the prior two quarters. Personal income missed, at 0.2% month over month against a 0.3% estimate, and Boyce flagged it as the series to watch for its effect on consumption. Real disposable income is falling, and the savings rate is falling with it, which he read plainly: more people are spending out of savings to hold their consumption level.

Consumer inflation expectations 12 months ahead sit at 5.80% on the Conference Board survey, well above any realized measure. Boyce discounted its influence on policy while finding it notable that the average respondent expects considerably higher inflation than the data shows. On the policy rate itself, consensus points to a quarter-point increase at the December meeting and roughly flat rates through the first part of 2027.

Rents Turn, Confidence Does Not

Median rent prices have drifted down for years. That has changed, and Boyce flagged it as a first: "this is the first time in years that we've actually seen positive year-over-year growth in rents." He attributed part of it to supply in several key markets, and framed it as a new difficulty for households already working the affordability problem.

The sentiment chart underneath it is starker than the commentary suggested. The share of Americans who expect their financial situation to be worse in a year has reached a record high near 40%, on a University of Michigan series running back to 1960.

The block ended on a sector in visible distress. Trucking company bankruptcies have run near 210 to 225 a year through late October in each of the last three years, a sustained uptick the chart describes as not seen in decades. Boyce connected it to diesel without claiming the link: "it's kind of hard to tell, reading between the lines, how much of this is due to financial stress caused by higher fuel prices. I actually don't know the answer to that."

What a Moat Is, and Who Is Lending Long

Boyce used one slide to answer a question he says he gets often, about what moat investing means in practice. The framework sorts competitive advantage into five types and three widths.

The bottom row is the part that makes it usable: each advantage shows up in a specific financial measure, so the framework can be tested against reported numbers rather than asserted. Boyce described the wide-moat profile as strong brand recognition, high switching costs, global presence, embedded cost advantages and real legal protection, which is the screen behind that part of investment management at the firm.

The fixed income chart next to it shows a split Boyce said he has not seen in this form before. The weighted average maturity of bonds issued in 2026 runs 9.8 years for US corporate issuance against 1.7 years for US Treasury issuance.

The consequence runs both ways. The Treasury has positioned itself for heavy reissuance over coming years, paying the rates available at issue, able to take advantage if rates fall and exposed if they rise. Corporate issuers, a large share of them hyperscalers who "really don't care what they pay," have locked in long. Boyce noted the duration cost of that choice: longer paper carries more inherent volatility in its value.

The Index Sold Off, and the Pieces Moved Apart

Dispersion inside the index has reached levels the data has not shown before. The share of S&P 500 constituents with a negative three-month correlation to the index touched roughly 32% in 2026 and stood near 28% in September, while the top 10 companies reached roughly 41% of total market capitalization before easing to about 39%. 

"We see the index is just like a singular number, but there's actually a lot going on under the surface, and not all of it is necessarily good," Boyce said. Concentration alone was tolerable while the rest of the index moved with it. Both conditions holding at once is the new part.

The sell-off arrived last week, which Boyce called "somewhat overdue and very much expected," with the Nasdaq down more than 3%. Boyce said the semiconductor index had broken through its 200-day moving average. On the chart in the pack, which runs to 30 October, the index has fallen from roughly 14,500 to about 11,000 while its 200-day line sits near 8,500, so the index is still above it and the break is not visible at that scale. The Magnificent 7 to S&P 500 ratio did cross, closing below its own 200-day average at 0.09 and down 1.81% on the day. Boyce treated such a break as a technical signal with a mixed record: price often keeps falling for a while after it, and sometimes it turns out to be a false bottom.

What rotated into is the more useful finding. October performance across S&P 500 style and sector indices separated cleanly.

Consumer staples, dividend aristocrats and low volatility all finished the month well up, while high beta, momentum and pure growth all finished down. Boyce described staples as the cyclically resistant businesses people buy regardless, and summarized the rest plainly: "momentum stocks have really taken it on the chin. Growth has taken it on the chin in favor of value."

Fund flows moved the other way from the rotation. BofA client net buys of US equities, on a rolling four-week average, sit near negative $5.0 billion. Boyce defines sentiment by behavior rather than survey: "a lot of individual investors are obviously scared when volatility hits, and some people tend to pull out at precisely the wrong time."

Earnings Concentration Is Why the Multiple Fell

Contribution to 2026 earnings growth is as concentrated as index weight.

Three sectors account for 71% of earnings growth. That concentration is also what pulled the market's multiple down: forward P/E falls when the denominator rises faster than the price, and the information technology forward multiple has fallen from above 30 to roughly 19, converging with the S&P 500's own. Strong earnings, not cheaper sentiment, did that.

Treasuries closed the pack on a recovery. After what Boyce called an awful September sell-off, he described last month as one of the best single-month performances for the Treasury market in some time. The 2-year yield sits at 4.57%, down 8.3 basis points on the day and back below its 50-day moving average, which means price has recovered since the two move inversely.

What the Week's Data Changes

Three things follow for how a portfolio is built rather than when it is traded.

The Fed's box is the dominant uncertainty, and it is genuinely two-sided. A quarter-point rise in December followed by a hold is the consensus, but the bond market has already moved a long way without waiting, and the 10-year round trip above and back below 5% happened in weeks. Duration decisions made on a forecast of Fed policy are being made on the slower of the two signals.

Dispersion changes what index exposure means. With more than a quarter of constituents negatively correlated to the index and the top ten near 40% of market capitalization, a broad index position is a more concentrated bet than it was, and the October rotation into staples, dividend growers and low volatility shows how much is moving underneath a single number.

The household data argues against assuming stress that the figures do not show. Spending growth is broad based, net worth is up across the distribution, and the weakest signals are specific: a falling savings rate, personal income at 0.2%, rents turning positive, and a record share of people expecting to be worse off in a year. That gap between sturdy balance sheets and poor expectations is the thing to plan around, and it belongs in a wealth management conversation rather than an allocation change.

FAQ

Why is rising inflation a problem for the Fed if the increase is small?

Because the direction has reversed while the labor market is still healthy, which removes the easy justification for cutting and does not yet supply a strong one for tightening hard. Core PCE sits near 3% against a 2% target, the move is not accelerating, and the shock-risk index has been easing. Boyce described the consensus as one more quarter-point rise this year followed by a hold, which is what a central bank does when neither argument has won.

What does it mean that the bond market moved before the Fed?

The 10-year Treasury yield rose above 5% and fell back below it within weeks, and the implicit October 2027 Fed funds rate followed the same path, easing from above 4.75% to around 4.5%. The chart's point is sequencing: policy expectations tracked the long bond rather than the other way round. Anyone setting duration from a forecast of Fed meetings is working from the slower signal.

Does high dispersion mean the index is riskier than it looks?

It means index exposure is less diversified than the constituent count suggests. Roughly 32% of S&P 500 companies had a negative three-month correlation to the index at the 2026 peak, and about 28% in September, while the top 10 reached about 41% of market capitalization. Both at once means the index level is driven by a small group while much of the rest moves independently or against it, which is what the October rotation made visible.

What makes a moat "wide" rather than "narrow"?

The framework separates five advantages: brand name, switching costs, network benefits, cost advantages and legal protection. A wide moat shows a top brand, effectively infinite switching costs, global network benefits, permanent cost advantages and full legal protection; a narrow one shows the local or temporary version of each. The practical test is the bottom row, since each advantage should appear in a specific measure such as margins, customer retention, market share or pricing power.

This article is derived from the November 1, 2026 edition of Boyce & Associates Wealth Consulting's Charts and Chat commentary. Insights and quotes are attributed to Eric Boyce as they appeared in that commentary. Charts are reproduced from the accompanying slide deck and were credited there to Apollo Academy, The Daily Shot, PIMCO, Bloomberg, River, the Federal Reserve Bank of San Francisco, the University of Michigan Surveys of Consumers, BofA Global Research, RBC BlueBay Asset Management, FactSet, LSEG Datastream, First Trust Portfolios, Sandy Leeds of the University of Texas at Austin, BlackRock, the St. Louis Federal Reserve and the Wall Street Journal. The piece does not separately cite external sources beyond the commentary itself; for primary data on employment, prices and national accounts, refer to the Bureau of Labor Statistics, the Bureau of Economic Analysis, the Federal Reserve and the US Treasury.

Investment advisory services offered through Boyce & Associates Wealth Consulting, Inc., a registered investment adviser. The views expressed are those of the speaker as of November 1, 2026 and are subject to change. Forward-looking statements and estimates are based on sources believed to be reliable but are not assured as to accuracy. Past performance is not indicative of future results, and all investments carry risk of loss. Nothing here constitutes legal or tax advice; please consult the appropriate professional regarding your individual circumstances.