Persistent US inflation is fueling speculation about Fed rate cuts
On Tuesday, consumer inflation expectations unexpectedly remained at 3.0% in September, signaling a persistent inflation outlook. Notably, September’s figures were in line with the US CPI report, which showed core inflation rising from 3.2% in August to 3.3% in September.
Despite the inflation data, the CME FedWatch Tool indicated an increasing likelihood of a 25 basis point rate cut in November. The Fed’s concerns about the US labor market and recent US producer price data have likely influenced sentiment. The probability of a 25 basis point Fed rate cut increased from 83.6% to 95.5% between October 14 and 15.
China-US relations in the spotlight
The overnight US stock market session will set the tone for Wednesday’s Asian session. However, China remains the focus as markets await further fiscal stimulus. On Wednesday, October 16, CN Wire reported on China’s efforts to strengthen relations with the US. to report,
“China’s President Xi: China is willing to be a partner and friend of the US. The success of China and the US is a mutual opportunity. Both should encourage and not hinder each other’s development.”
According to CN Wire, Xi Jinping wrote the comments in a congratulatory letter to the National Committee on US-China Relations.
Improved U.S.-China relations could ease concerns about tariffs, which could benefit the global economy.