The market welcomes a crucial turning point! The first CPI after the suspension will be released tonight. Can the "Two Eras" of inflation open the door for interest rate cuts and the "Christmas market" of US stocks?

Notice that Wall Street is anxiously awaiting the release of the November Consumer Price Index (CPI) report on Thursday, which will be the first data reading for this period since the record-breaking end of the US government shutdown last month. According to economists surveyed by Dow Jones, the report tracking the average price changes paid by the public for a range of goods and services is expected to show an inflation rate of 3.1% over the past 12 months. Excluding food and energy, the annual growth rate for core CPI is expected to be 3.0%. The US Bureau of Labor Statistics (BLS) stated that this release "will not include the month-over-month percentage change for November 2025 due to missing October data." Because of the government shutdown, the agency canceled the inflation report for October at the end of November (just weeks before the last Fed meeting of the year). The CPI data for September -- the only economic data released during the shutdown and the most recent report to date -- showed annual readings of 3.0% for both overall CPI and core CPI. Interactive Brokers' Senior Economist Jose Torres said in an interview, "The psychological difference between being in the '2s' versus the '3s' will be critical." While consensus expectations indicate the monthly inflation rate will reach the 3% threshold, this senior economist expects the overall and core readings to be lower than expected, at 2.9%. However, he believes the range for the overall inflation rate could be between 2.9% and 3.1%. A reading of 2.9% in the report could provide some positive momentum for the stock market going into 2026. In fact, Torres believes that such a figure would clear obstacles for the so-called "Santa Claus rally." He also thinks it would impact next year's interest rate outlook -- the Fed is expected to cut interest rates once next year. "If we could keep inflation in the '2s' instead of going back up to the '3s' in the last inflation report of 2025, it would definitely reinforce expectations for looser monetary policy, as it would allow for more room for rate cuts next year," Torres added. "Distorted" CPI While the release of this data could help pave the way for a year-end rally, other catalysts will be needed to achieve this. Because individuals like Victoria Fernandez of Crossmark Global Investments do not believe that a 0.1 percentage point move in either direction will cause a "significant" reaction in the markets. She also believes that even if the reading is 2.9%, Fed policymakers will still be in a wait-and-see mode. "I think it's going to be complicated. This isn't going to be a 'clean' CPI number," said the company's chief market strategist. She pointed out that the lack of month-over-month data is one factor, and when the BLS will start collecting November data is another. President Trump officially signed the appropriation bill on November 12, reopening the government after a 43-day shutdown (the longest in US history). This led the BLS to postpone the release of the November CPI report from the original date of December 10. "When the government opens up and starts collecting data, you're halfway through November, so you only get data for the second half of the month," Fernandez said. "You have to start thinking, 'Is there some kind of bias in the price trends and mechanisms at the end of the month compared to the beginning?'" Ultimately, the strategist believes the overarching theme will be inflation "remaining high," and it won't return to 2% as some expect. "There's a big uncertainty about what the future holds, because the various scenarios are contradictory," Fernandez said. "We could see softening trends in the unemployment rate, household income, consumer spending, but also 14% earnings growth expected for next year. Not all the puzzle pieces fit together completely." "Before we can make a true judgment about long-term prospects, we just need more information," she continued.