The market took to the US CPI data as saying that the Fed is done with rate hikes and with inflation gradually tracking lower, it means that we could even see rate cuts on the horizon. The shift in pricing here outlines that sentiment and is a key reason why equities rallied strongly in trading yesterday. In particular, the S&P 500 now looks to undo two months' worth of decline in just roughly three weeks:

S&P 500 index daily chart

The bullish mood is one that is hard to fight, amid a strong rebound off the 4,500 mark and dip buyers taking out both the 200 (blue line) and 100-day (red line) moving averages in rather swift fashion.

We're only 2.5% away from the highs for the year and given the prevailing market mood and a potential further retreat in Treasury yields (now that 10-year has broken below 4.50%), the Santa Claus rally going into year-end could see the S&P 500 at least retest the 4,600 mark next.