Consumer inflation is likely to be above 2 percent for the first time in two years when December data is released Wednesday, but bigger for markets could be whatever comes across Twitter from President-elect Donald Trump.
The headline reading on the Consumer Price Index is expected to come in at 0.3 percent, which could take it to 2.1 percent on a year-over-year basis, above 2 percent for the first time since the summer of 2014. That will get the attention of the market, since the Fed's inflation target is 2 percent, though it watches a different metric, the price index for personal consumption expenditures.
But markets will also be set to respond to headlines from Trump Tower and Washington, since there's clear disappointment with the fact that corporate tax reform looks as if it will take longer than expected by markets. The Trump administration has prioritized the replacement of Obamacare, and traders fear that will bog down other activity. Some strategists have said they do not expect the Senate to consider a tax plan until the fall, but the markets have been more enthusiastic.