#CPITestsDecemberRateOutlook CPI Tests December Rate Outlook: Could One Inflation Report Change the Fed’s Next Move?
The US inflation report coming on November 10 could become the next major trigger for financial markets.
After October payrolls surprised to the upside with 165,000 new jobs against a forecast of 65,000, investors are increasingly concerned that the Federal Reserve may raise interest rates again in December. Reuters reported that futures markets were pricing in roughly an 80% probability of a December hike after the jobs data.
Here is what makes Tuesday's CPI report unusual:
The latest available September figures showed headline inflation rising 0.6% month over month and 3.7% year over year. Core CPI increased 0.3% monthly and 2.6% annually.
For October, economists at RBC expect both headline and core CPI to rise around 0.3% month over month. The Cleveland Fed's November 6 estimate was slightly lower: 0.24% for headline and 0.21% for core. These are estimates, not actual results.
There is also an important data limitation: BLS did not collect October 2025 prices during the government shutdown. As a result, the October 2026 report will not include the usual 12-month headline and core inflation comparisons.
What could happen next?
If monthly inflation comes in hotter than expected, expectations of another Fed hike could strengthen. Higher yields and a stronger dollar may put additional pressure on Bitcoin, gold and technology stocks.
If inflation cools, markets could get some relief. However, one softer report may not be enough to reverse the current hawkish expectations.
My view: The jobs report has strengthened the case for tighter monetary policy, but inflation will be the deciding piece of the puzzle. I would watch core CPI, monthly price momentum and the market reaction rather than assume the Fed has already made its decision.
Will CPI strengthen the case for a December rate hike, or give markets a reason to breathe?
#USInflation #FederalReserve #bitcoin #CryptoMarket