Traders fully price in three Fed rate cuts by end-2025

Institutional analysts said the headline CPI monthly rate was slightly higher than expected. After the data was released, Treasury yields fell slightly across the board, indicating a sense of relief that the market believes the data hasn't gotten worse. Federal Reserve Chairman Powell has been focusing on the annual rate for some time. The core CPI annual rate in August was 3.1%, unchanged from July, in line with expectations, suggesting that inflation hasn't worsened. The headline CPI annual rate rose to 2.9%, slightly higher than July's 2.7%. The report showed that housing prices rose 0.4% in August, the largest monthly increase of all items. Food prices also rose, with the food index rising 0.5% for the month, with the food at home index up 0.6% and the food away from home index up 0.3%. This largely expected report paves the way for a Fed rate cut next week, with the market almost fully pricing in three rate cuts by the end of the year. (Jinshi)