To The Moon

It’s been 3-weeks (and counting) since the US government 01 Oct 2025 shutdown.

So far, both political parties remained in deadlock with neither party willing to backdown or come to a compromise.

Most US economic reports have been put on hold since government staff have largely been furloughed.

US Economic reports that have missed publication:

• US retail sales.

• US CPI and PPI inflation.

• Jobless claims - weekly and continuing.

• US Import price index.

• US leading economic indicators.

• Home sales.

• Consumer sentiments (final).

• New Home Sales.

US CPI YoY & Core CPI YoY - August 2025

In a twist of event, on 10 Oct 2025, US Bureau of Labour Statistics (BLS) announced that they would release a one-off September 2025 consumer price index (CPI) report on 24 Oct 2025 morning.

This exception / concession was made to allow the Social Security Administration to calculate and announce the annual cost-of-living adjustment (COLA) for 2026 benefits on time.

Analysts’ CPI Estimates ?

Inflation is likely stayed steady but elevated for September 2025. This as tariffs continued to put pressure on goods prices.

According to data from FactSet, economists foresee that:

• Headline CPI inflation will rise by +0.4% MoM in September, and +3.1% YoY. If “true”, it will be the highest 12-month inflation rate since May 2024.

• Core CPI will likely have risen by +0.3% MoM and remained unchange at +3.1% YoY.

Apparel and furnishings will likely see some of the larger price increases, while declining mortgages eased overall price pressures.

According to LPL Financial, Chief economist, Jeffrey Roach:

• Inflation is certainly temporarily running hot.

• Roughly in line with the consensus expectations in September 2025.

• Trump’s (new) tariffs will represent a onetime bump for consumer prices, not a permanent re-acceleration.

Cleveland Fed CPI Estimates ?

Federal Reserve Bank of Cleveland's NowCasting model for September 2025 inflation numbers are:

1. Headline CPI inflation is nowcasted near +0.38% MoM and around +2.990 YoY.

2. Core CPI inflation is expected to be about +0.26% MoM and around +2.95% YoY, reflecting persistent inflation, driven primarily by core services and shelter costs.​

Forecasts predict inflation remains above the Fed's 2% target, and the core inflation pressures, especially in services, show little easing as of this report.

Historically.

Before concluding that September 2025 CPI inflation has eased from August’s reading, it is ‘widely accepted’ that Cleveland Fed’s estimates are more often than not, more conservative than actuals.

For example, August 2025’s actuals YoY (CPI & core CPI) were 2.94 and 3.11 respectively, vs Nowcasting’s 2.84 & 3.05.

Fed’s Interest Cut Still On ?

US central bank FOMC committee will convene on Oct 28 - 29 as planned.

The release of the CPI inflation reports will be crucial reference materials for the Fed, given that all other US economic reports are unavailable - resulting in a black-box status on the US economy.

Based on the latest Fedwatch tool readings, sampled on 21 Oct 2025, the Fed looks poised to further cut US interest rate by a further -0.25%, barring any unforeseen circumstances. (see above)

Will US Market Fall ?

Given the 2 opposing forces of (a) CPI inflation expected to rise further (marginally) and (b) US Fed on track to trim another -0.25% from current interest rate, this is what I think may happen.

With market already accepting above 2 factors as likely to happen, it is unlikely US market will react ‘negatively and crash’ when the CPI reports are out.

Afterall, US markets have been showing resilience and strong gains registered in sectors like AI and consumer services, despite the sticky inflation pressures.

However, a continuous bubbling inflation may set sector rotation toward defensive stocks like Healthcare and Utilities.

Case in point.

• Based on past 6 month performances, $Health Care Select Sector SPDR Fund(XLV)$ have risen by +7.54% closing at $145.96 per share on 22 Oct 2025.

• Similarly, $Utilities Select Sector SPDR Fund(XLU)$ have also risen by +15.41% over the past 6 months.

Rather, US market is likely to be influenced by quarterly earnings reports from the likes of:

• $Tesla Motors(TSLA)$: continual fall from a less than stellar Q3 2025 profits ?

• $Intel(INTC)$ : quarterly earnings released after Thu, 23 Oct 2025 market closing.

• $Procter & Gamble(PG)$ : first sign whether Trump’s tariffs have impacted Consumer staples stocks ?

Time to rebalance one’s portfolio, easing into Healthcare and Utilities and out of $Consumer Discretionary Select Sector SPDR Fund(XLY)$ perhaps ?

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

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• Do you think US CPI inflation will continue to rise for September 2025 ’?

• Do you think it is “prudent” to rebalance one’s holdings to include Healthcare and/or Utilities stocks or ETFs ?

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