Equities retreat for another week last week bringing the major indices down to multi-month low levels. The S&P 500, specifically, is now trading just above a key support level that could lead the index to another 10% decline if broken. At face value, it is the tensions in Russia and Ukraine that are driving the market lower but there is a deeper story. The unexpected acceleration of inflation and the growing expectation for aggressive FOMC rate hikes is what's really driving the market. The Fed is expected to hike rates at least 4 times by June and there is a real chance the committee could surprise with a 50 basis point hike at the March meeting. The Fed will continue to be in focus this week with the PCE price index due out on Friday. The PCE index is the Fed's favored tool for measuring consumer-level inflation and it is going to be another hot one.

Also on tap this week, are earnings from the retail sector led by a report from Home Depot. Home Depot is expected to show sustained YOY growth and there is upside risk in the top-line figure. The risk for the market is that inflation and supply chain headwinds will cut into the bottom line and dampen the outlook for Q1 and Q2 results.