CPI for February is expected to have climbed 0.3%, according to a Reuters poll. The inflation report will be among the last key pieces of data before the Fed next meets on March 18-19. While the central bank is expected to hold its benchmark rate steady at 4.25%-4.5% at that meeting, Fed funds futures indicate about 70 more basis points of easing are expected through December of this year, according to LSEG data.
"Equities would not enjoy a hot CPI print because... it softens that Fed easing view that has been starting to build in the market," said John Velis, Americas macro strategist at BNY. Investors are also increasingly concerned about "stagflation" - slowing growth and rising inflation that is feared to be a toxic combination for a broad range of assets.
An elevated CPI report could "bring the 'S-word' into play," Velis said.