The equity market sold off hard last week on mounting fear of the FOMC. Not only did the Fed raise rates by the expected 75 basis points, but it indicated a minimum of 160 basis points more were coming. The news sent the yield on the ten-year treasure through the roof and the S&P 500 desperately seeking support. The index shed more than 5% for the week, putting it deeper into the bear market territory and on the verge of another 20% decline.

The next hurdle for the market will come on Friday with the PCE price index. The index is expected to moderate on a month-to-month basis but still come in hot versus last year. The risk is that consumer-level inflation will come in hotter than expected or worse, accelerate again, and raise the stakes in regard to the Fed, interest rate hikes, and the odds of a recession.