As of the time of publication, the Dow Jones Industrial Average rose 0.06%, the Nasdaq fell 0.34%, and the S&P 500 Index dropped 0.13%.

On Wednesday morning, the yield on U.S. 10-year Treasury notes dropped by 5.3 basis points to 4.38%. The 2-year Treasury yield fell by as much as 7 basis points to 4.27%. Following the CPI inflation data release, traders increased bets that the Federal Reserve will cut interest rates by 25 basis points next month.

U.S. October CPI rose 2.6% year-on-year as expected.

On Wednesday morning U.S. Eastern Time, the U.S. Department of Labor reported that the U.S. October Consumer Price Index (CPI) rose by 0.2% for the fourth consecutive month, with a year-on-year increase of 2.6%. This marks a slight uptick in the inflation rate compared to September, where CPI rose 2.4% year-on-year.

The core CPI, excluding food and energy items, rose by 0.3% month-on-month for the third consecutive month and increased by 3.3% year-on-year. Core CPI data can better reflect potential inflation trends.

Economists surveyed by the Dow Jones expect October CPI to rise by 0.2% month-on-month and by 2.6% year-on-year.

The Labor Statistics Bureau pointed out that in the October CPI data, housing expenditures accounted for more than half of the monthly total increase. These data highlight the slow and frustrating nature of combating inflation, which often sees lateral fluctuations on a larger downward path - sometimes persisting for months at a time.

Market interpretation of cpi.

This is the first inflation report after the U.S. presidential election. The October core cpi inflation rate in the USA remained strong, highlighting the challenges that Federal Reserve officials still face in achieving their inflation target.

Analysts pointed out that during Biden's presidency, Americans have been disappointed with inflation, with consumer prices now about 20% higher than when he took office. If there had not been an increase in inflation, the results of last week's U.S. election might have been different.

Despite the cooling trend in inflation, Donald Trump assumed office as the U.S. President during a delicate economic period. The current goal of the Federal Reserve is to lower interest rates to ensure continued healthy economic development without reigniting inflation.

The speed of price increases in the cpi is one of the key factors that the Federal Reserve considers when deciding whether to cut interest rates or maintain them. The latest cpi data, coupled with strong consumer spending and economic growth, will keep Federal Reserve officials cautious when discussing the speed of lowering borrowing costs in the next few months.

Media reviews of U.S. cpi data indicate that although inflation data is stabilizing, Federal Reserve policymakers seem likely to cut rates by another 25 basis points at their final meeting of the year next month.

The Managing Director of Charles Schwab in the UK stated that he does not attach much importance to today's October cpi data. He mentioned that the U.S. presidential election has to some extent disrupted the prospects for interest rate policy in the coming months. Like many others, he will closely monitor the tariffs, immigration, and tax reduction plans of the incoming Trump administration. Given that there is another cpi data release before the December Federal Reserve meeting, he will not attach too much significance to this data. Expectations for the Federal Reserve's next interest rate decision may not be influenced by today's report, as the Federal Reserve is currently more inclined towards employment tasks.

After the announcement of U.S. October cpi inflation data, traders have increased their bets on a December rate cut by the Federal Reserve. Traders are now pricing the possibility of a Federal Reserve rate cut in December at 75%, up from 60% before the release of U.S. inflation data.

According to CME Group's 'Fed Watch' tool, the current market pricing probability that the Fed will keep the current interest rate unchanged until December is 24.3%, with a cumulative 25 basis points rate cut probability of 75.7% (prior to CPI announcement, they were 37.9% and 62.1% respectively). The probability of keeping the current interest rate unchanged until January next year is 16.5%, with the cumulative 25 basis points rate cut probability of 59.2% and the cumulative 50 basis points rate cut probability of 24.3%.

Fed officials evaluate CPI.

After the release of October CPI data, Neel Kashkari, President of the Minneapolis Federal Reserve Bank, stated: "The overall data in the CPI report confirms our current trends; there are 6 weeks until the next Fed meeting, during which more data will be released."

Kashkari stated: "We are not ready to declare that inflation will stay above the 2% target; the labor market is slowing down; the labor market conditions are good, and we hope to maintain this status. Currently, there are no clear signs of inflation risks increasing; the bigger risk is that the economy may slump."

Currently, most Fed officials believe that the current short-term interest rate level is restrictive, which means that if there is no further rate cut, the labor market may cool down more than they expect, and even pose a risk of economic recession.

Later this week, some notable economic data will be released, including the Producer Price Index (PPI) on Thursday and retail sales data on Friday.

The U.S. Department of Labor will release the next CPI inflation report on December 11, conveniently a week before the Fed meeting. If the CPI data released at that time is much stronger than Fed officials hope, they may choose to temporarily halt further rate cuts. If the November employment report scheduled for release on December 6 shows a rebound in employment, confirming that last month's slowdown was only a reaction to hurricane and strike-related issues, the reason for pausing rate cuts will be more reliable.

However, analysts indicate that after the dust settles on the U.S. presidential election and the Fed's rate cut last week, the market may not be as sensitive to the data this week.

Traders on Wednesday are digesting the appointments of Donald Trump's cabinet, who may implement his 'America first' policy in the areas of border, trade, national security, and economy. Analysts indicate that with the Republican Party winning a majority of seats in the House of Representatives and potentially controlling Congress, there may be more volatility in the future. "We are still in the process of repricing from the Trump trades," said Lombard Odier's Chief Economist Samy Chaar, "There was some uncertainty in the House of Representatives, but now the situation of the Republicans winning completely is almost certain."

U.S. stocks fell on Tuesday, temporarily halting the post-election rally. The Dow Jones fell more than 380 points that day, a decrease of 0.9%, while the S&P 500 dropped 0.3%, and the tech-heavy Nasdaq fell 0.1%.

Co-Chief Investment Officer of Bridgewater Associates, Karen Karniol-Tambour, stated on Tuesday that U.S. stocks are a 'good thing' worth holding. She added that she expects strong economic growth in the United States under the leadership of the Trump administration. Since Trump's victory, the S&P 500 index has risen nearly 5%.

Tom Hainlin, Senior Investment Strategist at U.S. Bancorp Wealth Management, stated that the U.S. stock market declined on Tuesday, partly due to 'profit-taking based on a strong rally - especially the post-election strong rally - and some position adjustments ahead of Wednesday's CPI inflation report and Friday's retail sales report.'

Focus stocks

• Stocks related to the Donald Trump concept experienced mixed movement.$MicroStrategy (MSTR.US)$rose more than 4%,$JPMorgan (JPM.US)$、$Tesla (TSLA.US)$Rose nearly 1%

• $Spotify Technology (SPOT.US)$Rising over 7%, Q3 net income increased by over 360% to 0.3 billion euros, and Q4 operating profit is expected to increase by more than 700% year-on-year

• "SpaceX competitor"$Rocket Lab (RKLB.US)$Rising by over 35%, Q3 revenue increased by 55% year-on-year, Neutron rockets signed multiple launch service agreements with customers.

• $Palantir (PLTR.US)$Rising by over 3%, hitting a historical high intraday.

• Volkswagen will "splurge" $5.8 billion to advance cooperation plans. $Rivian Automotive (RIVN.US)$Rises more than 10%.

• Donald Trump concept stocks$Dave Inc (DAVE.US)$Rising more than 40%, the company's reported third-quarter adjusted earnings per share exceeded expectations and raised its sales guidance for the 2024 fiscal year.

• Diagnostic research company$Natera (NTRA.US)$Rising more than 20%, the company's Q3 losses decreased, revenues increased, and 2024 performance guidance was raised.

Editor/ping