The latest inflation report reveals that U.S. inflation rose to 2.7% year-over-year (YoY) in November, up slightly from October's 2.6%. While this uptick aligns with market forecasts, it has solidified expectations that the Federal Reserve will cut interest rates by 25 basis points (bps) during its December meeting.



  1. Inflation's Impact on the Fed's Decision:

    • The slight rise in inflation is not alarming and reflects controlled price pressures.
    • Analysts agree this supports the Fed’s strategy to begin easing monetary policy after a period of aggressive hikes to control inflation.

  2. Market Reactions:

    • Nasdaq 100 Hits Record High: The inflation data boosted investor confidence, pushing the Nasdaq 100 to an all-time high. Technology stocks, which thrive in lower-rate environments, were among the strongest performers.
    • Bond Yields: Treasury yields have remained stable, reflecting market confidence in the Fed’s outlook for gradual monetary easing.

  3. Economic Implications:

    • The inflation figure suggests that the Fed's tightening cycle has been effective, with price growth now closer to the 2% target.
    • The moderate rise indicates steady consumer demand and a resilient economy despite headwinds such as geopolitical tensions and global economic uncertainty.

Looking Ahead

As the Fed prepares to cut rates, markets will focus on its tone regarding 2025. Investors will be watching for any signals of caution about inflationary risks or optimism about sustained economic growth.

With the Nasdaq 100 setting records and inflation stabilizing, this data underscores the resilience of the U.S. economy and sets the stage for further market growth heading into the new year