The market ushered in a critical watershed! The first CPI after the shutdown was released tonight. Can the “second era” of inflation open the door to interest rate cuts and the “Christmas market” of US stocks?

The Zhitong Finance App notes that Wall Street is anxiously awaiting the November Consumer Price Index (CPI) report to be released on Thursday. This will be the first data reading for this period since the end of the record US government shutdown last month.

According to economists surveyed by Dow Jones, the report, which tracks changes in the average prices people pay for a range of goods and services, is expected to show a 12-month inflation rate of 3.1%. Excluding food and energy, the core CPI is expected to grow at an annual rate of 3.0%.

The US Bureau of Labor Statistics (BLS) said the release “will not include the month-on-month percentage change in November 2025 due to missing October data.” Due to the government shutdown, the agency cancelled the October inflation report in late November (that is, a few weeks before the Federal Reserve's last meeting this year). The CPI data for September — the only economic data released during the shutdown period, and the latest report so far — shows annual readings for both overall CPI and core CPI of 3.0%.

José Torres, a senior economist at Yingtou Securities, said in an interview: “The psychological difference between the '2' and the '3 letter' will be critical.”

Although consensus expectations indicate that the annual inflation rate will hit the 3% threshold for this month, the senior economist expects the overall and core readings to fall short of expectations, both 2.9%. However, he believes that the overall inflation rate is likely to range between 2.9% and 3.1%.

If the report shows a reading of 2.9%, this could provide some positive impetus for the stock market to enter 2026. In fact, Torres believes that such numbers will clear the barriers to the so-called “Santa Claus market.” He also believes that this will affect interest rate prospects next year — the Federal Reserve is expected to cut interest rates once next year.

“If in the last inflation report in 2025, we can keep inflation at the 'head 2' rather than rebound to the 'head 3', this will indeed strengthen expectations of monetary policy easing, as this will allow more room to cut interest rates next year,” Torres added.

“Distorted” CPI

Although the release of this data may help pave the way for a rebound at the end of the year, other catalysts are needed to achieve this. Because people like Victoria Fernandes of Crossmark Global Investments don't think that a 0.1 percentage point fluctuation in any direction will cause a “huge” reaction in the market. She also believes that even with a 2.9% reading, Fed policymakers will still be in a wait-and-see mode.

“I think the situation is going to be complicated. This won't be a 'clean' CPI figure,” said the company's chief market strategist. She pointed out that the lack of month-on-month data is one factor, and when exactly the Bureau of Labor Statistics can start collecting November data is another factor.

US President Trump officially signed the funding bill on November 12, enabling the government to reopen after a 43-day shutdown (the longest in US history). This caused the Bureau of Labor Statistics to postpone the release date of the November CPI report from December 10.

“November was halfway past when the government actually opened up and began collecting data, so you can only get data for the second half of the month,” Fernandes said. “You have to start thinking, 'Is there any deviation in the price trend and operating mechanism at the end of the month compared to the beginning of the month? '”

Ultimately, the strategist believes that the overall main theme will be inflation “staying high” and not going back to 2% as some expected.

“We are facing huge uncertainty about where the future will go because the various situations are conflicting,” Fernandes said. “We may see weak unemployment trends, weak household incomes, and weak consumer spending, yet at the same time expect 14% profit growth and strong income next year. All the pieces of the puzzle don't fit together perfectly.”

“We just need more information before we can make a real judgment about the long-term outlook,” she continued.