U.S. markets advanced Thursday after September’s CPI report showed inflation easing to 3%, reinforcing expectations for two Federal Reserve rate cuts before year-end. Stocks climbed, Treasury yields fell, and the dollar weakened as investors viewed the data as confirmation that price pressures are cooling and policy tightening is nearing an end.
The 2-year Treasury yield dropped to 3.46%, signaling growing confidence that the Fed will pivot toward a looser stance in the coming months. Traders now widely anticipate the first rate cut at the next policy meeting, followed by another in December.
While optimism lifted sentiment across equities and bonds, analysts warned that the ongoing U.S. government shutdown could distort upcoming data releases, adding uncertainty to the Fed’s path. For now, markets appear convinced that the tightening cycle is over and monetary easing is on the horizon.
