All Eyes on Tomorrow’s CPI Print

Markets risk-on after Trump-Xi meeting is confirmed. Treasury yields edged higher over the course of the session after the White House stated that President Trump will be meeting with Chinese President Xi Jinping on October 30, signaling easing trade tensions between the US and China. Surging oil prices also contributed to the move, as new US sanctions against Russia’s biggest oil companies fueled inflation fears. Yields closed 4-6 bps higher across the curve, with the 2-year yield at 3.49% and the 10-year yield at 4%. Meanwhile, equities rallied today on the Trump-Xi meeting news, with the S&P 500 and NASDAQ up 0.58% and 0.89%, respectively.

Delayed CPI data to release tomorrow. Having been delayed by the ongoing US government shutdown, the Consumer Price Index for September will finally be released on Friday, nine days behind schedule. Estimates show headline CPI is expected to have risen by 3.1% on an annual basis last month, which would be the highest increase since May 2024. The inflation data is being released despite the shutdown, after the BLS specifically recalled employees to collect and publish the data which is also needed in the Social Security Administration’s cost of living adjustment. Tomorrow’s release will be closely watched by many parties, including the Fed, ahead of next week’s FOMC meeting and policy decision. While inflation has remained persistently above the Fed’s 2% target, the Fed’s forecast of Personal Consumption Expenditures had expected a 3% rise in prices in 2025, and is projected to fall to 2.6% next year.

Existing home sales rise at strongest pace in seven months. Existing home sales met expectations in September, rising to an annual rate of 4.06 million contracts closed, up from 4 million in the month prior. This is the highest rate in seven months, largely driven by lower mortgage rates and tamer price increases. Lawrence Yun, chief economist of the National Association of Realtors, said, “As anticipated, falling mortgage rates are lifting home sales. Home prices continue to rise in most parts of the country…” The median home sales price only increased 2.1% from a year ago, compared to year-over-year growth in 2024 which hovered above 4%. Another driver is the increase in the number of homes on the market, with the supply of existing homes surging 14% from a year ago.