Market Pulse: Softer Inflation Fuels Fed Cut Hopes

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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Inflation Data is Out

• Core Inflation MoM: Forecast 0.3%, Actual 0.2%
• Core Inflation YoY: Forecast 3.0%, Actual 3.0%
• Inflation Rate MoM: Forecast 0.4%, Actual 0.3%
• Inflation Rate YoY: Forecast 3.0%, Actual 3.0%

Thoughts On The Data: The data comes out slightly softer than expectations. This is the right kind of a "downside surprise". We've seen the "stickier" elements of the inflation basket; 'Food' and 'Housing' both come down here. This is good news for both the Fed and the markets. Core Inflation YoY ticking down to 3.0% from 3.1%.

What Does This Mean for Fed Cuts?

This doesn't change much for Fed cuts. We still expect the Fed to cut at their remaining Meetings this year (October 29th and December 10th), with odds for cuts at both Meetings being north of 94%. This'll likely follow further cuts in 2026. Also, slightly softer inflation numbers could allow the Fed to guide to more future cuts with this kind of inflation number.

Recent Price Action:

We've seen the TradFi indexes (S&P, Nasdaq and Russell) rebound close to their highs following the small pullback that we saw on 10/10, whilst BTC has rebounded from its lows, but it remains below its key horizontal resistance at $112,600. However, with this "softer" inflation print, we'd like to see TradFi indexes break out to new highs, and for BTC to reclaim $112,600, and convincingly close above that level.

Should BTC pull back further, we would be buyers between $101k and $107k.

BTC 1D Timeframe - potential bottoming pattern.

Cryptonary's Take:

Inflation numbers come in lower than expected, with Core Inflation YoY coming in lower - the first tick down for this data point since March 2025. This allows a clearer path for the Fed to continue cutting interest rates at both their October and December meetings as they can focus on the labour market side of their mandate rather than the inflation side.

Risk assets have moved higher off the back of this data, with the TradFi indexes moving higher, particularly the Russell, and BTC has moved up from the $110k's into the $111k's.

We remain positioned in quality assets (Majors and select memes) and we'd look to take advantage of a pullback should one come. For BTC, that might look like a retest of $101k-$107k. However, if BTC can remain in the $108k's to $111k's, then we'd look to add some small buys in the $108k's. We expect that BTC can move up drastically over the coming 1-2 months and potentially be north of $135k come year-end 2025.

Peace!