Written before the U.S. September inflation data (CPI) at 8:30 tonight:
Overall CPI: Expected 3.1% (lower than last month), Cleveland Fed 3.0%, Nick also 3.1%.
It has increased, but the market thinks the new tariffs in August are a "one-time deal," a one-off impact, posing no significant threat to Federal Reserve policy.
Core CPI: Expected 3.1% (same as last month), basically all guessed correctly.
Not exceeding expectations = Market remains calm; both at 3.0% = Market gets excited.
Rate cut: CME shows a 98.9% chance of a rate cut in October, labor data likely to disappoint (government shutdown not issued), even if tonight's CPI is bad it won't affect the October rate cut.
But December? If inflation continues to soar, the Federal Reserve may pull back.
Summary: CPI should not explode, rate cut in October is stable, the market will at most just yawn.