Reward 500 Tiger-coinsUS November CPI YoY +2.7%; Est .+2.7%
US Nov. Core CPI Rises 3.3% Y/Y; Est. +3.3%
As CPI brings no surprise, traders have increased their bets on a Fed rate cut in December. According to the CME FedWatch Tool, futures traders are now pricing in an 86% probability of a rate cut this month.
Richard Flynn of Charles Schwab UK points out that while policymakers have recently suggested they are open to considering a rate cut, today’s CPI report could temper those expectations.
Several Fed officials previously have expressed dissatisfaction with the pace of inflation improvement, and the regression seen in November’s data fails to offer reassurance on that front.
Despite analysts warning that rate cuts could end sooner than expected next year, the prospect of a December rate cut seems increasingly likely, especially with the 100bps of cuts already implemented this year.
In pre-market trading, both t $SPDR S&P 500 ETF Trust(SPY)$ and $Invesco QQQ(QQQ)$ rose following the release of the data.
Does this CPI report confirm that a December rate cut is a done deal?
Can CPI push markets to new highs?
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Can CPI push markets to new highs?
CPI alone is unlikely to drive markets to new highs but creates a favorable backdrop. Stable inflation, paired with a dovish Fed stance or strong corporate earnings, could boost investor confidence. Sectors like tech and consumer discretionary may benefit, but broader market highs will require clear signs of economic growth and sustained optimism.