Was Wednesday's rally for real? Bond yields are rising again this morning, and futures are lower. The Bank of England intervention was one of the few pieces of bullish news since Jackson Hole, but did it matter? The real issue for the markets are 1) the fear that the Fed will raise rates so far it will induce a recession, and 2) that earnings will collapse and turn negative. The BOE actions do nothing to address those concerns. But are inflation and earnings the only worries? The market applauded the move, said Chris Harvey, the head of equity strategy at Wells Fargo Securities, because there is an additional fear in the market. "Earnings are a fear but not the fear," Harvey said in a note to clients. "We view the real fear as decaying faith in central banks' ability to negotiate these trying times (and, quite frankly, the smell of desperation)." Others agreed. "I'm worried about what the loss of confidence in the U.K. represents," Citadel CEO Ken Griffin told CNBC's Scott Wapner at the Delivering Alpha conference. "It represents the first time we've seen a major developed market, in a very long time, lose confidence from investors. And it represents the challenges that a country faces when policymakers have created a poor foundation." Bottom line: If the fear that central banks are losing their ability to deal with the crisis is a factor in the downturn, particularly in Europe, than the BOE intervention is very useful. Regardless, for this to be anything more than a "dead cat bounce," investors will need to see signs of inflation cooling. "We are skeptical that the calmer mood in markets on Wednesday marks an end to the recent period of elevated volatility or risk-off sentiment," said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note to clients Thursday. "For a more sustained rally, investors will need to see convincing evidence that inflation is coming under control, allowing central banks to become less hawkish." That next inflation data point is the August personal consumption expenditure, due to be reported Friday. Inside the Fed, it's always been the central bank's favorite inflation gauge. After rising to 6.3% year over year in July, the August PCE is expected to come in at 6.0%, with core prices (excluding food and energy) up 4.7%. Month over month is expected up 0.1% for the headline, and 0.5% for core. If Friday's PCE is even a little below consensus, stocks could easily move higher again. If not, bond yields will have another leg up, stocks another leg down. The macroeconomy is still driving the narrative, but we will also need to see signs in the coming weeks that earnings are not going to collapse. We will get a small data point from Nike , which reports Thursday after the market closes. Like FedEx , Nike gets a large percentage of sales overseas (25% from Europe, 20% from China). Is 2% even a reasonable target for inflation? The chorus pushing back against the Fed raising rates until inflation gets to 2% is growing louder. Chris Harvey at Wells Fargo is very typical of this argument. "There is a growing chorus that 2% is just a number, and may not be the right inflation target over the next several years given the trends of onshoring and regionalization; countries placing security over price; and as China's development would no longer act as a deflationary force," he said. "...Clients have indicated they would prefer stable 3-4% inflation and no recession over a 2% inflation rate with recession."