Next week's inflation data just got even more important. Here's what's ahead for the market

Next week's inflation data just got even more important after the latest Federal Reserve meeting. Next Thursday's release of the Fed's preferred inflation gauge follows this week's FOMC meeting that marked a sea change for the central bank. After new chairman Kevin Warsh signaled a more hawkish direction than investors were anticipating from the Trump appointee — the former Morgan Stanley banker famously said "inflation is a choice" — stocks pulled back, the bond market came under pressure and short-term yields pushed higher. On Wednesday, the yield on the 2-year Treasury — sensitive to short-term Fed policy — spiked more than 16 basis points, rising above 4.21%, as expectations of an interest rate hike were pulled forward to as soon as October. The 2-year last traded with a yield above 4.17%. That raises the stakes for upcoming inflation reports, which investors will now laser in on for any signs that the U.S. central bank could begin to hike rates. "A tightening campaign is no longer a tail risk though, it's a live one," wrote Dennis DeBusschere, chief market strategist at 22V Research. "And a tightening campaign would come along with higher recession probabilities and significant downside risk to equities." "Expect a violently flat market until we have some clarity on how Core PCE will break," DeBusschere added. Inflation The inflation picture may be about to get even murkier. …