Market Update: Mild U.S. Inflation Data Fuels Rate Cut Optimism

The latest CPI numbers came in cooler than expected, and the market responded immediately. TSX climbed as investors recalibrated their bets on the Federal Reserve's next moves. Here's what's happening:

When inflation data softens, it chips away at the urgency for the Fed to keep rates sky-high. That opens the door for rate cuts down the line—something equity markets have been waiting for. Lower rates typically mean cheaper borrowing costs, which can spark risk appetite across all asset classes, including crypto.

The trading logic is straightforward: tame inflation removes one major headwind. You've got fewer reasons to fear aggressive monetary tightening, and that shifts sentiment. TSX's rally reflects this shift pretty clearly. Even modest inflation beats can ripple through both traditional and digital asset markets.

For anyone tracking Fed policy and its spillover effects on markets, this is the kind of data point that matters. Softer inflation readings keep the possibility of easing alive—and that's the kind of backdrop where growth trades tend to perform.