Insights 
VT 
The US Bureau of Labor Statistics is set to release the Consumer Price Index (CPI) data for September. This information will be available on Friday at 12:30 GMT.
The release could affect the US Dollar, as it may impact expectations regarding the Fed’s interest rate decisions for the rest of the year. Analysts are particularly watching for any effects of President Donald Trump’s tariffs on prices.
Inflation Trends
With the September CPI data due in the next hour, we are positioned for an inflation figure that could exceed the 4.0% consensus estimate. Recent data, like the Producer Price Index for September 2025, already showed a 0.5% monthly jump, largely driven by the new tariffs on imported electronics. This follows August’s 3.8% CPI reading, suggesting the upward trend is solidifying.
Volatility is our main focus, with the VIX index already climbing to 19 this past week in anticipation of a hawkish Fed reaction. We see opportunities in buying near-term call options on the VIX or put options on bond ETFs like the TLT. A higher-than-expected inflation print will almost certainly cause a spike in market fear.
Interest rate futures are signaling a major shift but may not have fully priced in the Fed’s potential response. The CME FedWatch tool showed a 60% chance of a November rate hike yesterday, a number we expect to jump above 85% if inflation comes in hot. We are therefore watching for opportunities to short December SOFR futures immediately after the release.
Market Strategies
For equity indices, we are hedging against a downturn similar to the market reaction we saw throughout 2022 when the Fed aggressively tightened policy. A strong inflation number would likely pressure growth stocks, making put spreads on the Nasdaq 100 an attractive defensive play. The market has been overly optimistic recently, and this could be the catalyst for a correction.
The US Dollar is poised to strengthen significantly if inflation accelerates, as interest rate differentials would widen in its favor. We are looking at call options on the U.S. Dollar Index (DXY), particularly against the Euro, which is facing its own economic slowdown. A move above 108 on the DXY in the coming weeks seems highly plausible.
