Traders bet that Thursday's CPI data is "no big deal", expectations for U.S. stock market volatility plummet.

In the past three years, the monthly consumer price report in the United States has been a federal data that stock traders have been extremely concerned about. Now, as investors await the November inflation report to be released on Thursday, most are feeling indifferent rather than the usual anxiousness. According to data compiled by Barclays Bank, option traders are betting on the S&P 500 index to fluctuate by 0.7% in any direction. This magnitude is significantly lower than the average actual volatility of 1% triggered by the 12 reports up to September. There are valid reasons for the shift in market sentiment. The Federal Reserve is currently more sensitive to signs of weakness in the labor market than to minor changes in inflation rates. Data on Tuesday showed that the job market is still weak, opening the door for rate cuts next year. The November report, originally scheduled for release on December 10th but now postponed to Thursday, is considered "stale" compared to usual, and due to the government shutdown causing interruptions in data collection, its reliability may be lower than normal. In addition, the CPI report for October will not be released. Barclays Bank's global head of stock tactical strategy, Alexander Man, said, "The market is operating on the assumption that this report is either 'no big deal' or its quality is in doubt from a data collection perspective and will be ignored by the market." According to the US Bureau of Labor Statistics, due to the lack of October data, this CPI report can only provide a partial overview of inflation, and cannot make monthly comparisons of the overall index and core index. This report is unlikely to change the outcome of the Fed's policy meeting in January. Investors expect the central bank to keep rates unchanged at that meeting, waiting for more reliable economic data. The Fed just cut rates by 25 basis points for the third consecutive time last week. Greg Boettcher, head of US stock and derivative strategies at BNP Paribas, said, "The potential impact on the stock market is very limited. The threshold for CPI data to have an impact is very high. It would require extremely skewed data from expectations. " This is largely because the Fed is closely monitoring downside risks in employment, with its focus at least as high as on CPI. US employment growth in November remains weak, with the unemployment rate rising to a four-year high, indicating a continued cooling of the labor market after a weak October. Not all Fed officials are more focused on the labor market aspect of the central bank's dual mandate. Two officials dissented in last week's rate cut vote, citing concerns about tariffs impacting prices. Raphael Bostic, head of the Atlanta Fed, said on Tuesday that policymakers should continue to focus on inflation, expecting high price pressures to continue into most of next year. Investors last saw a complete CPI report at the end of October, showing an overall inflation rate of 3% - slightly above the Fed's target but in line with market expectations. Investors expect similar data for November. Chris Zacharelli, Chief Investment Officer at Northlight Asset Management, said, "We don't expect anything out of the ordinary," as market expectations are for an annual increase of around 3%. If the data reaches 3.5%, it could catch traders off guard. Similarly, significantly better-than-expected data - such as 2.7% or lower - would also catch people off guard, but in a positive way." Another reason for the decreasing importance of CPI is that Chairman Jerome Powell's term is set to end in May next year. It is expected that his successor will strongly support significant rate cuts to meet the unconventional deep rate cut demands made by Donald Trump, regardless of the data. Jason Kugan, index options trader at Simplex Trading in Chicago, said, "Any report involving inflation is important this year, but as the year progresses and we approach the appointment of the new Fed chairman by Trump, its importance has diminished." Traders may also downplay the inflation data on Thursday based on seasonal factors, as the stock market is nearing its traditionally bullish period. Kugan believes, "These trading positions suggest to me that people are expecting the market to rebound to new all-time highs." The S&P 500 index fell for the third consecutive day on Tuesday, closing 1.5% below its previous record high.