Core inflation: sticky prices under the microscope

Core inflation is expected to ease to 0.3% from 0.4%, and that matters because this is the cleaner read on sticky price pressure. In a market that has been willing to reward risk on calmer days and punish rate sensitivity on rough ones, this print can still steer yields and the most rate-sensitive sectors.

1. A core inflation print above 0.3% would be the market's signal that sticky price pressure is still there even after stripping out food and energy. That would usually be read as more reason for yields to stay firm and for real estate and technology to stay on the defensive.

2. A softer reading would do the opposite by easing the sense that inflation is stuck. That can help rate-sensitive stocks first, because it lowers the pressure from rising yields.

3. If core inflation comes in near 0.3%, the reaction may be more about the trend than the headline. Traders will look at whether the cooler path is broad or if one stubborn category is doing most of the damage.

Core inflation is a direct guide for rate expectations. If it stays sticky, banks and brokers have to price in a different yield backdrop; if it cools, that backdrop eases.