Traders and investors will have plenty of macro inputs to ponder in the new week, including a CPI report from the world’s largest economy.

Core consumer prices probably rose 0.3% in the US last month from December, economists reckon. The headline all-items gauge likely increased 0.2% for a third month, according to consensus.

The US isn’t out the woods yet on the inflation front, even if markets are keen to pretend otherwise. As discussed in the latest Weekly, things are going well, particularly considering how badly it could’ve gone for Jerome Powell and friends, but the most important question in the macro-policy universe remains unanswered: Is US inflation on a sustainable path back to the Fed’s definition of price stability or not? If not, well, all bets are off — figuratively and in this context quite literally (there’s a lot of money wagered on the durability of disinflation).

Annual revisions released on February 9 were mercifully immaterial. “With the update doing nothing to alter expectations for the timing of the Fed’s first cut, the market was quick to move on, reinforcing our observation that sometimes it’s about what didn’t happen as opposed to what did,” as BMO’s Ian Lyngen and Vail Hartman put it.

Markets now price just ~20% odds of a cut at next month’s FOMC meeting. The Fed’s gone out of its way to suggest those odds are actually much lower, but a lot can go wrong in a short period of time. Just ask March of 2023. And regional banks are back above the proverbial fold, again for the wrong reasons (albeit for different wrong reasons this time).

There’s no outcome for the January CPI release that’d materially raise the chances of an “early” Fed cut, where early means next month. For that, you’d need a disastrous jobs report, and thanks to January’s blockbuster read on payrolls, February’s NFP print would have to be an outright catastrophe to compel a cut in March. So, basically, the only way the Fed cuts next month is in the presence of a (left) tail risk between now and then.

What the January (and February for that matter) CPI releases might do, though, is increase the Committee’s resolve to hold terminal, thereby squeezing May odds in favor of the first cut coming in June. Fed speakers are lined up around the block again for the coming week. Chris Waller has something scheduled on February 15.

Markets will also get an update on nominal spending in the US. Retail sales probably fell in January, economists imagine.

Recall that December’s retail sales report, released on January 17, singed doves’ wings with a control group print that was quadruple consensus.

If retail sales do show a decline, it’d be just the second drop in 10 months. If they accelerate, that’d be one more strike against imminent Fed cuts.

Also on the US calendar in the new week: PPI (and PPI revisions), the preliminary read on University of Michigan sentiment for February (that release is taking on more political urgency), and the first of this month’s housing data, including builder sentiment (for February) and housing starts (covering January). Across the pond, the UK releases CPI data on Wednesday.

US equities will be gunning for a 15th weekly gain in 16. It’s hard to know what to say about that other than “What could go wrong?” (Cheap punchline, I know.)