The Consumer Price Index (CPI) report, which is due on Wednesday, will be the first under President Donald Trump’s tenure, with signs of cooling, which is likely to increase the chance of an interest rate cut and lift the spirits for investors in risk assets that have been hammered in recent weeks.

Bureau of Labor Statistics is expected to say that headline inflation dropped year by year to 2.9%from 3%, while core inflation, which excludes unstable food and energy prices, also lost 0.1 percentage points to 3.2%.

Slower inflation increases the chance of an interest section, making more attractive investments more attractive. CPI, which measures the cost of a basket of goods and services throughout the US economy, has accelerated for four consecutive months.

In the last few weeks, the S&P 500 has dropped almost 10% from its high time and Bitcoin (BTC) has lost about 30% to about $ 80,000.

Both Trump and Treasury Secretary Scott Bessent have emphasized the need for lower 10-year state yields to reduce federal funds. So far, this strategy seems to be working, with the 10-year dividend falling to 4.2% from 4.8%, the dollar index (DXY) is weakening below 104 and WTI crude oil stabilizing in the mid-$ 60 area-in accordance with the administration’s financial plans.

Meanwhile, the Truflation index has hit 1.35%, the lowest level since September 2020. However, five- and 10-year inflation expectations are still over 2%, indicating that Trump still has work to do with controlling long-term inflation expectations.

At the Federal Open Market Committee (FOMC) meeting on 18-19. March, President Jerome Powell is expected to keep the Federal Funds Rate Steady at 4.25%-4.50%, according to the CME FedWatch tool.

Investors will carefully look at the inflation report, as a cooler than expected printing could cause Federal Reserve to consider interest pieces. Conversely, a “warm” inflation reading will probably keep the rates higher for a longer period of time and put additional pressure on risk assets.