The highly anticipated March CPI (Consumer Price Index) report is set to be released Wednesday, with markets anticipating how this data will impact the Federal Reserve's interest rate cut outlook. Morningstar Chief US Market Strategist David Sekera joins Yahoo Finance Live to share his insights on the path forward.

Sekera emphasizes that the market will be closely focused on the shelter inflation component of the CPI report, as this metric has been a key driver in keeping inflation "running hotter for longer thus far this year." However, he notes that shelter and rent metrics are starting to fall, indicating that shelter inflation should cool over time.

Despite this, Sekera believes that overall inflation can reach 2.2% this year and that the Fed is in a position to cut rates as soon as June. He anticipates the Fed will continue cutting rates at "every meeting over the course of the rest of the year," with the Fed funds rate falling to a range of 4-4.5%.

Regarding investment strategies, Sekera warns that "what's worked for the past 1.5 years is not gonna be what's gonna work going forward." He advises investors to adopt a more defensive approach as the market is currently "stretched."

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