Wednesday’s highly anticipated inflation data could either upset the equity market's fragile recovery or clear the way for additional gains. Investors now await U.S. January Consumer Price Index and Retail Sales due at 13:30 GMT, which will be the most closely watched in recent memory, with investors seeking to understand the recent drops in stocks and bonds.
Last week, Wall Street shares slumped from record highs scaled late in January after Treasury yields rose to four-year highs, largely because of inflation worries.
Nervous financial markets could shake on any sign that inflation is exceeding expectations at a rate that may spur the Federal Reserve to quicken its plans for tightening. The threat of higher interest rates after strong job and wage figures on February 2nd sent Treasury yields spiking and started a rout in equities that pushed them into the first correction in two years, accounted for 10% drop.
Core CPI, which excludes food and energy, rose 1.7 percent in January from a year earlier, compared with 1.8 percent in December, according to the median projection of economists ahead of the Labor Department data.