Markets Rally Ahead Of Fed As US Inflation Cools

With all eyes on the Federal Reserve ahead of tomorrow’s crucial decision on interest rates, investors breathed a sigh of relief Tuesday after U.S. inflation numbers came in below expectations.

Consumer prices rose at an annualized 7.1% in November, according to the Bureau of Labor Statistics. That was well below the 7.3% analysts anticipated, and the 7.7% recorded in October.

Month-on-month inflation came in at 0.1%, and the Core CPI, which excludes food and energy due to their volatility, was an annualized 6%.

The S&P 500 and Nasdaq rallied more than 2% in midday trading Eastern Time before giving up some ground. Bitcoin and Ether climbed more than 3% and hit their highest levels since Nov. 10.

Investors are hoping cooling inflation will prompt the U.S. central bank to ease up on future rate increases. Despite the data, the probability of a 0.5% hike tomorrow remains around 80%, according to CME FedWatch.

Target Rate Probabilities – CME FedWatch

Top Gainers

Liquid staking giant Lido, layer 2 rollup Optimism, and layer 1 blockchain Avalanche are among the day’s best performers, each up around 10%

Decentralized derivatives protocols GMX and Gains Network (GNS) are up 50% and 30%, respectively, in the past 30 days. The total value locked (TVL) on GMX has crossed $900M for the first time.

FTX’s collapse and the prevailing negative sentiment around centralized exchanges may be spurring traders to consider alternative platforms.