The US November CPI report will be released tonight.
Economists expect the year-on-year CPI growth rate to be 2.7%, slightly higher than October's 2.6%.
Bank of America strategists have stated that, after several months of muted market reactions to CPI data, this inflation data could have a particularly significant impact on the US stock market.
A stronger-than-expected CPI could reignite volatility, especially after the stock market rebounded by 5% following the election. More importantly, the inflation data will influence the Federal Reserve's next interest rate decision. An unexpected upward adjustment could increase the likelihood that the Fed will pause its rate-cutting cycle sooner than expected.
According to the CME Group's FedWatch tool, the market expects an 86% chance that the Fed will cut rates by another 25 basis points at next week's meeting. Therefore, tonight's CPI data could have a significant short-term impact on market volatility, making close attention essential.