The Coming Week: Car Jamming

This month's Fed intrigue may be over and done with, but market strategists say macro issues will continue to dominate trading.

The Federal Open Market Committee delivered its expected 25-basis-point rate hike Tuesday, pushing the key rate to 2.75%. The move marked the seventh straight time the Fed raised rates by that amount.

The Fed's accompanying statement contained the "measured pace" language that got a lot of attention ahead of the meeting. Dropping those words would have suggested the Fed was prepared to go hiking in 50-basis-point increments on the road to a less-accommodative range of 3%-4%.

The "measured" language may have stayed in, but the Fed's additional observation that "pressures on inflation have picked up in recent months and pricing power is more evident" spooked the market last week. Inflationary fears were further exacerbated when the government said the consumer price index rose 0.4% in February, vs. a 0.3% forecast. The core CPI, which excludes energy and food costs, rose 0.3%, compared with a 0.2% forecast.

Traders say the search for inflation -- and its impact on interest rates -- will continue to be the theme next week, especially with the arrival of the March payrolls number on Friday.

The market is expecting 225,000 jobs to be created, down from February's 262,000. The general rule of thumb is that job growth of 150,000 per month keeps up with the arrival of new entrants into the job market.

Should the job number prove too strong, analysts such as Paul Mendelsohn of Windham Financial say the Fed could speed up the rate hike process -- to the detriment of the stock market, which has been moving inversely to bond yields.

"Good news is bad news in this case," says Mendelsohn. "A higher-than-expected number allows the Fed to push rates up faster, whereas a lousy number will make them think twice."