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Rate cut optimism fuels the rebound rally

11/13/2024 22:17:00 GMT

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By

Stephen Innes

Rate cut optimism fuels the rebound rally

Markets

Stocks rallied on Wednesday, bouncing back from Tuesday's dip, which had interrupted a post-election winning streak. The trigger? Inflation data that landed right on target was a breath of fresh air for traders navigating the recent chaos of unpredictable economic indicators. The news brought a wave of optimism, especially as it nudged the odds for a December rate cut up to 80%, solidifying hopes for what some stock traders call the "ultimate holiday stocking stuffer."

With 34 days to go, futures traders are now assigning an 82% probability to a December rate cut, according to the Fed Watch tool—a scenario that beats receiving the dreaded lump of no rate-cut coal in the holiday stocking. The consumer price index met expectations, easing fears of a surprise uptick that might have thrown a wrench in the Fed’s easing plans. Even Fed hawks got in on the cheer, with Minneapolis Fed President Neel Kashkari expressing his confidence on TV that inflation is “headed in the right direction.”