Fed Chair Jerome Powell isn’t just kicking out climate protestors, he is  one step closer to the moment where he could “close the f-king door” on one of America’s headiest financial problems.

Soft landing in sight: The Consumer Price Index, America’s most popular inflation metric, grew just 3.2% YoY, bringing it closer to pre-pandemic levels — sending the S&P 500 and Nasdaq up 2% yesterday.

• What went down: Monthly energy prices decreased 4.9% in October, while airline fares fell 0.9%.
• What stayed high: Shelter contributed the most to inflation, while food prices remained stubbornly high.

The news instills confidence that the Fed could finally be done with rate hikes — as interest-rate futures estimate less than a 1% chance of another increase as of Tuesday morning, per the WSJ.

It ain’t over till the Fed sings: Last week, JPow said that the Fed was “not confident” that existing policies were enough to bring inflation to its 2% goal. And if needed, more hikes could be in the cards — a view shared by other Fed bank leaders like San Francisco’s Mary Daly.

Investors prepare for a post-inflation world

If rising rates led to a major correction in both the stock and bond market, what should investors expect when rates fall? Some are betting on the opposite — starting with the bond market. Aggressive rate hikes have driven down the prices of bonds — sending them into “the greatest [bear market] of all time,” according to BofA.

• Since the Fed began its rate hikes, US 30-year bonds have lost half their value from peak to bottom, but that has changed in recent weeks…
• Investors are piling into popular Treasury ETFs like the iShares 20 Plus Year Treasury Bond ETF (NASDAQ:TLT), which has recently seen back-to-back record inflows.

Stocks too, please: Investors in BofA’s survey have begun accumulating stocks again — with cash levels falling from 5.3% to 4.7% — the lowest since Nov. 2021. Fund managers are “favouring them in their portfolios relative to benchmarks [indices] for the first time in 19 months” (FT).