Coach Mark here.

It is a busy week ahead and there is little doubt that Wednesday’s CPI consumer inflation report is the highlight of the week. Inflation has become a topic that has started to get more and more attention in recent months and there is a chance for a strong narrative to form after Wednesday. Recent inflationary data has been hot and if inflation comes in above expectations, then “the return of inflation” narrative will start to gain strength. This will send yields higher and markets have been very sensitive to yields recently and we likely would see a return of volatility…something that has been absent for the most part this year.

On the flip side, if inflation is shown to have moderated then the bulls have a powerful narrative to work with. A narrative of strong economic growth and moderating inflation. You likely would see Fed speakers back off their increasing hawkish rhetoric lately (we have at least seven scheduled this week), yields likely fall, and after a lot of recent put buying the stage could be set for a breakout of the S&P.

Quite divergent outcomes there from a narrative/macro backdrop standpoint. It makes Wednesday morning certainly interesting this week and one to prepare to adjust to after the data comes in. Also adding to the inflationary conversation will be producer inflationary numbers on Thursday and consumer inflation expectations (something Powell has commented on) on Friday.

While inflation is front and center this week, we also have the kickstart to earnings season this week but I will have more to say on that tomorrow.

Have a fantastic start to your week and be sure to check out the Halftime Report today as break down all the charts.

Chart of the Day: Treasury Index (TNX)

Markets are easier to navigate when we don’t bring up the yields chart but it is one of those weeks to pay attention to yields. Breakouts of yields from these levels could start to put pressure on risk assets.  

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