The reaction to last week's CPI print was pretty dramatic.
We see a couple of related factors:
Given the fall in gas prices, the S&P bumped off the bottom in anticipation of a soft print. Positioning went from negative to perhaps modestly positive. CPI caught the market on the wrong foot
Gas prices as reported in the CPI did fall as expected, but just about everything else went up (see below). Everyone knows gas fell because of releases from the Strategic Petroleum Reserve (SPR). That policy is definitely transitory. With everything else going up, inflation fears pulled a Lazarus
Watch rents. Lagging but steady inflation indicator that is closely tied to wages.