November Inflation Cools: ETF Strategies to Play

U.S. inflation pressures eased further in November, offering a nice surprise to investors. The Consumer Price Index (CPI) rose 2.7% year over year, below the 3.1% increase economists had forecast, according to Bloomberg data, as quoted on Yahoo Finance.

Core Inflation Also Undershoots Estimates

Core CPI, which excludes food and energy, increased 2.6% from a year earlier in November, well under the 3.1% rise economists had expected. In September—the most recent month with full data—both headline and core CPI had risen 3% year over year.

The November report was the first inflation reading released since September, as October’s CPI was not released due to the government shutdown.

Tariffs, Fed Policy and Inflation Outlook

Pantheon Macroeconomics’ chief U.S. economist Samuel Tombs said the CPI data are consistent with core PCE inflation slowing to 2.7% in November, from 2.9% in September, making a rise to 3% by year-end unlikely, as quoted on Yahoo Finance.

Against this backdrop, below we highlight a few exchange-traded fund (ETF) investing strategies that can be gainful for investors.

Bet on Treasuries

Treasuries gained as softer-than-forecast U.S. inflation data led traders to boost bets that the Federal Reserve will cut its benchmark interest-rate at least twice next year, per Bloomberg, as quoted on Yahoo Finance. The Fed projected PCE inflation to end 2025 at 2.9%, down from the 3% forecast in September.

Now the actual data also showing signs of cooling, traders’ confidence may have boosted. Note that Fed projections released last week pointed to just one rate cut in 2026, following three successive 0.25% cuts to close out 2025.

iShares 20+ Year Treasury Bond ETF TLT rose 0.48% on Dec. 18, 2025 while iShares 0–1 Year Treasury Bond ETF SHV gained 0.02%.

Long Gold?

Gold market, which is already red-hot this year, may see some strength from cooling inflation, unless there is a solid profit booking in gold and investors rush to the equity markets in anticipation of lower rates.  As gold is a non-interest-bearing asset, the yellow metal is expected to outperform if rates remain lower for longer. The largest gold bullion ETF SPDR Gold Trust GLD should now be closely-tracked.

Growth ETFs to Gain Traction?

Given this beneficial investing backdrop, investors can bet on large-cap growth ETFs. After all, growth investing thrives in a low-rate environment. State Street SPDR Portfolio S&P 500 Growth ETF SPYG is an example of the growth ETFs that may gain if inflation continues to stay calm.

Play ETFs That Offer You Higher Current Income

In reflection of the falling inflation data, the benchmark 10-year U.S. treasury yield fell to 4.12% on Dec. 18, 2025 from 4.16% recorded on Dec. 17, 2025. The two-year U.S. treasury yield also slipped to 3.46% on Dec. 18, 2025 from 3.49% recorded on Dec. 17, 2025 during this timeframe. Somber inflation data led to this slump in bond yields.

Against this scenario, ETFs that offer higher current income should be in vogue. These ETFs include Vanguard High Dividend Yield ETF VYM (yields 2.44% annually),Global X SuperDividend ETF SDIV (yields 9.61% annually), FT Vest S&P 500 Dividend Aristocrats Target Income ETF KNG (yields 8.57% annually), and Global X SuperDividend U.S. ETF DIV (yields 7.09% annually).

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This article originally published on Zacks Investment Research (zacks.com).

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