Bond Yields Plunge on Cooling Inflation – Fed Cuts and Stock Rally in Play?
The delayed September inflation report – pushed back by the U.S. government shutdown – turned out a bit cooler than expected, reaffirming the narrative that price pressures are easing. The Labor Department said headline CPI rose 0.3% in September, slightly under the 0.4%/3.1% that economists had forecast reuters.com. Core CPI was up 3.0% YoY. Wall Street greeted the news calmly, since even at 3% inflation remains above the Fed’s 2% goal. What mattered more was that the softer reading bolsters confidence in near-term rate cuts: U.S. futures now fully price in a quarter-point cut next week reuters.com, and a Reuters poll found virtually all economists expect two cuts by year-end ts2.tech. In its commentary, Reuters notes that the report “keeps the Fed on track to cut interest rates” again reuters.com.
