Equity markets fell to new lows last week despite the Fed's assurances a 75 basis point interest rate hike was not on the table. The S&P 500 fell to the lowest levels in months and could move lower in the coming week is the CPI data comes in hot again. There is an expectation for consumer-level inflation to cool in April for no other reason than tough comps to the prior year, the risk is that inflation rose at a hotter rate than the market is pricing in and will up the stakes in terms of the FOMC.

The FOMC has been incrementally increasing its outlook for inflation and rate hikes over the past two quarters, we will not be surprised to see it happen again following the CPI release. In other news, the non-farm payroll report came in as expected and points to ongoing health in the labor market. The bad news is a decline in the participation rate suggests unemployed workers have quit looking for jobs and wages continue to put upward pressure on inflation.