Equity markets rebounded strongly last week after a better-than-expected CPI report. The report shows inflation slowed more than expected but it is still high and in line with an outlook for continued FOMC interest rate hikes. The news sent the S&P 500 up more than 6.5% in two days and has it on track to retest the 4,100 level but the market is not out of the woods. The weak CPI data lead to a weaker dollar and that has oil prices moving higher which is a spur for inflation.

This week, the market will be focused on a full slate of economic data that includes several key reads on the housing market, manufacturing data, and the index of leading indicators. The index of leading indicators has been negative for the last 5 months and is expected to contract again. The takeaway is that, even with light CPI data, the damage to the economy may have already been done.