Investing.com -- The Federal Reserve's upcoming November 6-7 meeting is likely to see a stronger stance from monetary policy hawks, Yardeni Research strategists said in a note, as September’s inflation data came in hotter than anticipated.

This challenges the position of Fed Chair Jerome Powell and other dovish members of the Federal Open Market Committee (FOMC), who delivered a 50 basis point rate cut last month amid concerns about a slowing economy. Yardeni strategists note their credibility has been weakened, especially after the latest jobs report showed a further drop in the unemployment rate and record-high payrolls.

“Today’s CPI data support our story that the Fed shouldn't cut the federal funds rate (FFR) at its two remaining meetings this year,” strategists said in a Thursday note.

Bond market signals appear to align with this outlook. Since the Fed’s 50-basis-point rate cut on September 18, the 10-year Treasury yield has climbed from 3.63% to 4.11%, reflecting rising inflation expectations.

Stocks, meanwhile, have only slightly dipped from the new record highs reached yesterday. Yardeni believes that any further rate cuts “would increase the odds of a stock-market melt-up.”

The research firm highlighted several key data points from the latest CPI report, explaining why the Fed may need to halt its dovish shift.

In late 2022, Fed Chair Jerome Powell stressed the importance of supercore inflation (core services inflation excluding housing) in predicting future core inflation trends. Thursday’s CPI report showed that supercore CPI inflation has inched up from 4.3% to 4.4% year-over-year, a “far cry from 'mission accomplished’,” Yardeni says.