The latest Consumer Price Index (CPI) report showed that U.S. inflation rose by 3% year-over-year in September, a slight uptick from August’s 2.9% but still within the range markets had anticipated. Core CPI, which excludes volatile food and energy categories, held firm at 3.2%, indicating that underlying price pressures are easing but not fully subdued. The data reflects continued stability in goods prices but persistent stickiness in services and housing costs areas that the Federal Reserve has repeatedly highlighted as barriers to achieving its 2% target.

Energy prices edged higher due to recent supply constraints, while food prices remained relatively stable. Despite that, markets viewed the overall report as evidence that inflation is cooling without stalling growth a scenario economists call a “soft landing.” U.S. Treasury yields dipped following the release, and major equity indices gained modestly as investors grew more confident that the Fed’s tightening cycle may finally be approaching its end. Traders are now assigning higher odds to a potential rate cut by the end of the year, assuming inflation data remains on this trajectory.