Core inflation: sticky prices on trial

Core inflation is one of the cleanest tests of whether price pressure is still stuck or finally easing. With the market in a sideways, rate-sensitive mood, this release can matter as much as the labor data because it goes straight to the Fed's next move.

1. A print above 0.4% would be the most hawkish outcome in the set, because it says underlying inflation is still sticky. That would likely push yields up and make the market less comfortable with near-term easing.
2. A miss below 0.4%, especially if it moves closer to 0.2%, would be the cleanest relief for bond markets and rate-sensitive stocks. It would suggest price pressure is finally softening in a way the Fed can work with.
3. If the reading lands right around 0.4%, the message is that inflation is cooling, but not by enough to make everyone relax. In that case, the market may stay in wait-and-see mode unless the labor data also turns softer.

Core inflation is the Fed's favorite kind of price signal, so it moves the whole rates complex. Financial names care because it changes the path of policy and the curve they earn off.