Last week's bounce for markets could be the start of a more lasting rally, according to Fundstrat's Tom Lee. The strategist pointed to a "meaningful change in Fed commentary and a far more favorable set-up for risk assets upon investor positioning" as the set up for the market to see a bigger bounce than it did during its summer rally. "It is for these reasons we see risk assets having the potential to gain more than many skeptics expect," Lee wrote in a note to clients on Sunday. By Lee's count, the summer rally that started in June lasted for 23 trading days and saw the market rise 16%. This rally has the potential to be bigger on both counts, Lee said. The S & P 500 rose more than 4% last week, its best since June. Recent comments by Federal Reserve officials and a report on Friday from the Wall Street Journal have suggested that the central bankers are growing concerned about potentially overtightening. Lee, who thinks inflation has peaked and will decline from here, said the commentary suggests the Fed is coming around to his view. "While skeptics say this is because something is 'gonna break,' commentary by Fed members show it is arguably more due to acknowledging that monetary policy takes time," he said. The Fed will likely need inflation data to decline in order for these remarks to have follow through. However, Lee said that lags in rent and a data quirk in health care related to insurance are reasons to believe that inflation is already slowing under the surface. Lee pointed to the employment cost index, due out on Friday, as an important data point for his theory on inflation. "If the ECI comes in below 1% for 3Q2022, this implies 4% annualized labor costs and typically 1.5%-2.0% is subtracted for productivity. This is not a wage-price spiral and thus, further supporting 'peaking inflation' thesis," he said.