Ahead of that big number, stocks in Asia and Europe were a touch higher, but S&P 500 and Nasdaq futures were trading sideways as traders remain cautious ahead of the latest pivotal read on U.S. inflation. Crypto, too, was flailing, with Bitcoin trading 0.3% lower around $44,200. Ethereum’s Ether, another popular inflation-hedge bet, was down 1.5%.

Here’s what to expect: Economists are forecasting that prices in America ticked up again in January, putting the year-on-year CPI rate at 7.2%, the hottest run-rate since the first term of Ronald Reagan’s presidency, at the tail end of the 1981–82 recession.

What Americans paid last month for used Honda Accords (and the gas to fill them up), plus toilet paper, rents, and avocados will be keenly watched by the Federal Reserve. The central bank is all but certain to raise the prime lending rate next month. But a larger than expected CPI print could send a jolt through the markets, leading to increased speculation that the Fed will have to speed up rate hikes this year, or raise its lending rate in bigger increments.

That’s the uncertainty that hangs over risk assets today.

“The kryptonite for markets is undoubtedly inflation at the moment,” writes Jim Reid, global head of credit strategy and thematic research at Deutsche Bank, in an investor note this morning. “We are approaching a crucial point for U.S. CPI. If we don’t start gliding lower in line with expectations soon, the market is going to be pricing some 50bps [basis point] Fed hikes into the equation for 2022. 

“Today’s number,” he adds, “is a complicated one as Omicron could create distortion that unwinds next month.”

The highly contagious COVID variant is on the wane across the U.S. and much of Europe, but its effects will be seen in today’s inflation data, analysts warn. “Omicron has caused factory shutdowns and threatened port closures in parts of Asia, which will only perpetuate the type of supply-chain constraints that are driving inflation higher,” says Bankrate chief financial analyst Greg McBride. “Expected interest rate hikes from the Federal Reserve will slow demand somewhat, but won’t fix the supply chain.”

What else to watch for?

In the U.S., stocks to watch are Disney and Uber, both of which reported big beats after the bell yesterday. Disney surprised analysts with strong Disney+ subscriber growth and better than expected results in its theme park business. Shares in the entertainment giant were up nearly 7% in premarket trading.

Uber, too, is popping premarket. Shares in the ride-hailing company were up more than 5% at 4 a.m. ET as the company reported stronger than expected results during the Omicron wave. Uber shares are up more than 11% in the past week.