Inflation may be the fear driving the market again this week when September data is released, according to Bank of America. The financial firm’s trading desk said in a note Monday morning that the stock market’s implied move on Thursday’s consumer price index report was more than 1%, compared with a 0.7% move three months ago. In general, inflation has slowed in recent months, and investors and the Federal Reserve appear to be more focused on a potential slowdown in the labor market. But last week’s stronger-than-expected jobs report shook the consensus view of the economy. “After the report of the bombing activities, the CPI is no longer an ‘event.’ … Stocks should be able to withstand a small surprise in rising currencies, but a big surprise could bring more volatility,” Bank of America noted. Long-term Treasury yields rose again on Monday, another sign of renewed fears about inflation. The CPI report will be out before the opening bell on Thursday. Economists polled by Dow Jones expect the CPI report to show a 0.1% increase in September and a 2.3% increase from the previous 12 months. Expectations for core CPI, excluding food and energy prices, it is 0.2% month-on-month and 3.2% year-on-year.
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