The NY Fed consumer inflation expectations and the French confidence vote are key events scheduled. <\/p>\n
The European session remains uneventful, leading to markets potentially consolidating ahead of the US CPI report or maintaining last week’s trends. <\/p>\n
In the American session, the focus is on the NY Fed consumer inflation expectations data, part of three major surveys including the University of Michigan and the Conference Board. <\/p>\n
This survey may not heavily impact markets but offers detailed insights into inflation expectations. It is often regarded as reliable due to its large panel and consistent methodology, although it releases later than the others. <\/p>\n
The French confidence vote may see Prime Minister Bayrou losing, prompting President Macron to select another Prime Minister. <\/p>\n
Market adjustments to this development are expected to be minor, possibly creating only short-lived fluctuations.<\/p>\n
With the market in a holding pattern, we are likely to see consolidation ahead of the key US CPI report later this week. The major trends from the prior week, which saw a slight risk-off sentiment, could continue as traders position themselves for the next big data point. This quiet start to the week is a time for setting up positions rather than reacting to new information.<\/p>\n
The main focus remains on US inflation and what it means for Federal Reserve policy. After the last core CPI reading in August 2025 came in at a still-stubborn 3.1%, the market is pricing in a 65% probability of another rate hold at the next meeting. We see traders buying volatility through options on the S&P 500, expecting a sharp move once the new inflation number is released.<\/p>\n
Today\u2019s NY Fed inflation expectations survey will give us a small clue, but it is unlikely to be a major catalyst. The previous report showed one-year expectations dipping to 2.9%, the first time below 3% since early 2024, so we will watch to see if that cooling trend continues. A surprise jump in this number could cause a brief sell-off in short-term bond futures.<\/p>\n
Across the Atlantic, the French confidence vote is mostly background noise that is already reflected in asset prices. We have seen the spread between French and German 10-year bonds hold steady around 65 basis points for weeks, a sign that the market has adapted to the political uncertainty that began with the 2024 snap elections. Any unexpected fallout could create intraday volatility in the euro, but it shouldn’t alter the bigger picture for derivative traders.<\/p>\n
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