Market Buzz: CPI in Focus

Stocks Roll Their Way Up Again & the Dollar Is on a Ride

Yesterday’s market mood: Every market lens was on a calm stretch. No headline‑sizing data or sensational news to spark excitement. The middle‑east tensions kept the vibe sober and everyone’s mindful of the September U.S. CPI figure due today.

Dollar on the Move

The DXY almost hit 103 – its best level since mid‑August.
Fed speculators are pricing in a 75‑percent chance (3 in 4) of a 25‑basis‑point cut at the next FOMC, and only 41 bp of easing for the rest of the year.
These hawkish bets align with the robust September jobs data, but the market’s enthusiasm may have swung too far and now risks turning dovish if CPI cools.

Fed Minutes & Treasury Talk

Minutes from yesterday’s FOMC reveal a committee that’s not as united as it seemed. A handful of officials (about 2‑3, which some call “Fed code” for “some”) leaned toward a modest 25‑bp sliver last month – Bowman’s stance against a 50‑bp was the only outright contrary voice. Meanwhile corporate bonds continue to sell off, with 2‑30 year yields climbing up to three basis points on the day. Yet, borrowers are still hesitant, likely waiting for pre‑CPI softness to settle.

Gold’s Down Turn

Gold, however, has been on a losing streak – six days running. Unlike equities, precious metals trickle down without a catalyst, and that’s been happening. A break under $2,600/oz is probably the break point for more sellers to step in.

Equities Keep Up the Momentum

The S&P 500 made a fresh record high yesterday – two consecutive gains for the first time in a couple of weeks. The tech-heavy Nasdaq 100 trended stronger still. I’m staying bullish, but the upcoming Q3 earnings season presents a bit of a challenge. Luckily, companies have a buffer of upside surprises, with last quarter’s EPS numbers revised downwards by roughly 4%. The earnings season will likely keep revealing growth for a fifth straight quarter.

Key Event of the Week

The headline event: the September U.S. CPI report. Expectations have the headline price up 2.3 % YoY – the lowest inflation in almost 3 years – and core CPI steady at 3.2 % YoY. Even if the core remains stubborn, the Fed still might keep easing. A cooler print could chill the dollar and give bonds a breather.

All other releases – ECB minutes for September, U.S. jobless claims – will likely play second fiddle to CPI. None of them align with the October NFP week.