(Bloomberg) — Wall Street kicked off the week on a cautious note, with traders positioning for key inflation data that will help shape the outlook for Federal Reserve policy and global financial markets.
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Stocks, bonds and the dollar saw small moves just a few days ahead of the key consumer price index. The gauge is projected to show moderation while still remaining too high to warrant rate cuts. On Monday, a Fed Bank of New York survey highlighted an increase in expectations for inflation.
Some prominent trading desks are warning that investors should gear up for a potential break in the calm that’s come over stocks. The options market is betting the S&P 500 will move 1% in either direction after Wednesday’s CPI, according to Andrew Tyler at JPMorgan Chase & Co.
“The key risk is a hotter CPI print,” Tyler said. “But upcoming macro data creates a two-tailed risk — with one tied to…
