Equities tried to rebound from Monday's selloff on Tuesday after the CPI data came in only as expected but the threat of rising inflation outweighed any relief felt by the market. The takeaway from the CPI report is that inflation is still on the rise, rising at a record, and accelerating with no sign of letting up. In this paradigm, the FOMC is expected to aggressively hike interest rates and that is being seen in the Fed Funds Futures data. According to the CME data, the FOMC will raise rates by at least 100 basis points over the next two meetings and there is a chance for 125 basis points.

The risk for the market on Wednesday is the PPI data. The PPI is a leading indicator for CPI and it is expected to accelerate on a month over month and year over year basis. Later this week, earnings season will kick off with reports from JPMorgan Chase on Thursday and a handful of other big banks on Friday.