Analysis: The November CPI report may just be a "passing show," with a very high threshold to trigger a market rally.

BlockBeats News, December 17 — Over the past three years, the monthly Consumer Price Index (CPI) report has been one of the most closely watched data points by U.S. stock traders. Today, investors are no longer sitting on the edge of their seats but are instead waiting with a nonchalant attitude for the inflation data to be released on Thursday. Options traders are betting that the S&P 500 index’s daily fluctuation will stay within 0.7%. This is well below the average actual volatility of 1% triggered by 12 CPI reports up until September this year. The shift in market sentiment is understandable. The Federal Reserve has recently been more focused on signals of a softening labor market rather than slight fluctuations in inflation rates. Data released on Tuesday showed that the employment market remains sluggish, leaving room for rate cuts next year. “The market has already assumed that this data is either irrelevant or of questionable quality from a data collection perspective and will not be overly concerned,” said Alexander Altmann, Head of Global Equity Tactical Strategy at Barclays. The report is also unlikely to change the outcome of the Federal Reserve’s policy meeting in January next year. Another reason for the decreased importance of CPI is that Federal Reserve Chair Powell’s term will end in May next year. His successor is expected to strongly support significant rate cuts to align with the unconventional large-rate cuts requested by U.S. President Trump—regardless of the data.