The last US CPI data for 2025 is about to be released, and the key indicator that the market is quietly competing over is this inflation figure—will it stay at 3%, or drop into the high 2s at 2.9%? Although it seems only a 0.1 percentage point difference, it involves the Federal Reserve's future policy direction and is more about the re-pricing of asset prices.

Initially, the market consensus was that the inflation rate would stabilize around 3%, but TD Securities economist Torres provided a different forecast—2.9%. This one percentage point difference has once become a "trading signal" in traders' hands. Why does it matter so much? Because if inflation truly falls below 3%, it means inflation is approaching the Fed's 2% target, and once this trend is established, expectations for rate cuts in 2026 will be significantly strengthened. The "Santa Claus rally" that the stock market desires, the decline in corporate financing costs, and the easing of mortgage rates—all these positives depend on this data point.

However, there is an obvious flaw in this data itself. The US government shutdown led to the Bureau of Labor Statistics canceling the October inflation report, which directly resulted in November's data being unable to be linked to monthly changes, providing only an incomplete annual figure. In other words, this CPI report is like a partial picture—it shows the outline of the whole year but obscures the details of inflation fluctuations in the past two months. The market's reaction is both contradictory and interesting: on one hand, eager for the "Christmas gift" of 2.9%, on the other hand, questioning the authenticity of the data.

If Torres's prediction proves true, it will undoubtedly clear recent policy concerns for the stock market, and the imagination of Fed rate cuts will be fully unlocked. But if the data ultimately settles at 3% or higher, the market's previous rate cut expectations will be frustrated, and whether the stock market can maintain its rally becomes uncertain. This is why the market's interpretation of this data is not just an economic issue but also a psychological battle—every percentage point change could reshape investors' expectations for the policy environment in 2026.