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    The UK S&P Global Manufacturing PMI registered at 49.6, exceeding predictions of 46.6

    by VT Markets
    /
    Oct 24, 2025
    The US Bureau of Labor Statistics will release the Consumer Price Index (CPI) data for September this Friday at 12:30 GMT. This data could influence the US Dollar by affecting expectations for the Fed’s interest rate decisions for the rest of the year. Analysts are particularly interested in how President Donald Trump’s tariffs might impact prices.

    Inflation Trends

    With the September CPI data coming out soon, we expect the inflation figure could be higher than the 4.0% consensus estimate. Recent data, such as the Producer Price Index for September 2025, already showed a 0.5% monthly increase, mainly due to new tariffs on imported electronics. This follows August’s CPI reading of 3.8%, indicating that inflation is rising steadily. Volatility is our primary concern, as the VIX index has already climbed to 19 this week in anticipation of a hawkish Fed reaction. We see a chance to buy near-term call options on the VIX or put options on bond ETFs like TLT. If inflation comes in higher than expected, we will likely see a spike in market fear. Interest rate futures are indicating a significant shift but may not fully reflect the Fed’s likely response. The CME FedWatch tool recorded a 60% chance of a November rate hike yesterday, a figure we expect to rise above 85% if inflation is strong. We’re watching for opportunities to short December SOFR futures right after the release.

    Market Strategies

    For equity indices, we are preparing for a downturn similar to the market reactions seen in 2022 when the Fed tightened policy aggressively. A strong inflation number could pressure growth stocks, making put spreads on the Nasdaq 100 an appealing defensive strategy. The market has been overly optimistic recently, and this could trigger a correction. If inflation accelerates, the US Dollar is likely to strengthen as interest rate differences widen in its favor. We are considering call options on the U.S. Dollar Index (DXY), especially against the Euro, which faces its own economic slowdown. A rise above 108 on the DXY in the coming weeks seems quite likely. Create your live VT Markets account and start trading now.

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