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Inflation could be a market-driving fear 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 market-implied move for stocks around Thursday’s consumer price index report is now above 1%, compared to a realized move of 0.7% over the prior three months. Generally, inflation has been trending downward in recent months, and investors and the Federal Reserve seem to be more focused on a potential slowdown in the labor market. But last week’s stronger-than-expected jobs report has shaken up the consensus outlook for the economy. “After the blowout jobs report, CPI is no longer a ‘non-event.’ … Stocks should be able to withstand slight upside surprise in inflation, but a sizeable surprise would bring more volatility,” the Bank of America note said. Long-term Treasury yields also rose on Monday , another sign that there might be renewed fears around inflation. The CPI report is due out before the opening bell Thursday. Economists surveyed by Dow Jones expect the CPI report to show a 0.1% increase in September and a 2.3% rise from 12 months earlier. The expectations for core CPI, which exclude volatile food and energy prices, are for 0.2% month over month and 3.2% year over year.
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