Unreliable data? After the release of the US CPI in September, traders increased their bets on a rate cut in November instead

Despite the US September CPI released last night exceeding expectations across the board, traders have increased their bets on a rate cut. Analysis suggests that futures traders currently believe that the "data is unstable." FOMC voter Raphael Bostic stated that it is important to see if the data can form a significant trend, otherwise it may just be temporary fluctuations. For example, the sharp increase in initial jobless claims may be influenced by Hurricane "Helen." Currently, traders believe that there is an 87.1% probability, higher than 80.3%, that the Fed will cut rates by 25 basis points at the November meeting. Probability of a 25 basis point rate cut in November rises to over 80% Data released by the US Bureau of Labor Statistics on Thursday showed that the US September CPI rose by 2.4% year-on-year, slightly lower than the previous value of 2.5%, but higher than the expected value of 2.3%; the core CPI in September (excluding volatile food and energy costs) rose by 3.3% year-on-year, slightly exceeding both the expected and previous values of 3.2%. Most Wall Street analysts believe that the September CPI data is mixed, although it has strengthened expectations that the Fed will slow down the pace of rate cuts, ruling out a significant 50 basis point cut, but it will not change the Fed's judgment that inflation is still on a downward trend. Karl Schamotta, Chief Market Strategist at Corpay, stated: "Investors may have been overly optimistic about a significant rate cut after the September meeting, but in the coming months, a slow and gradual rate cut is still the most likely outcome." FOMC voting member Raphael Bostic stated that although the September employment report and consumer price index were higher than expected, it is important to see if individual data points form a larger trend, or if they are just temporarily "unstable." The sharp increase in initial jobless claims may be influenced by Hurricane "Helen", according to Joseph Brusuelas, Chief Economist at RSM: "The sharp increase in initial jobless claims is related to the hurricane and is a harbinger of recent distortions in key economic data." "If recent key economic data is overall unstable and distorted, perhaps the best thing we can do is wait for the turmoil to pass."