Eurostoxx futures rose by 0.4% in early European trading after a rough day yesterday. German DAX futures also climbed 0.4%, while French CAC 40 futures increased by 0.5%. UK FTSE futures stayed the same. This change comes as the market feels a bit calmer overall. US futures are steady, with the S&P 500 futures up by 0.1%. There was notable market activity yesterday with the cash market opening and regional bonds trading. It’s unclear if this trend will continue today. Today’s slight rise in Eurostoxx futures seems like a cautious pause rather than a real comeback. The sharp losses yesterday came from unexpected news: the Eurozone inflation for August 2025 hit 3.1%, higher than the predicted 2.8%. This has increased expectations that the European Central Bank will delay its planned rate cut when it meets next week. Due to this uncertainty, implied volatility remains high. The V2X index spiked above 25 yesterday for the first time since spring 2025. This suggests that buying protective put options on the Eurostoxx 50 is a smart move to guard against another drop before the central bank meeting. While options are pricey, the risk of not being hedged seems greater. We recall late 2022 when similar inflation surprises led to long periods of market volatility as investors adjusted to more aggressive central bank actions. Back then, initial recoveries were often followed by selling, which warns us not to chase this morning’s small rally. This historical pattern hints at possible ongoing weakness. In the US, steadier futures do not change the impact of strong wage growth data from last Friday, which showed a 4.2% increase year-over-year. Traders might think about using option spreads to manage risk, like a bear call spread on the S&P 500. This allows them to earn premium while betting that the market won’t rise much in the coming weeks. Everyone is now focused on the ECB’s rate decision set for next Thursday, September 11th, 2025. Until then, we expect the markets to move within a tight range driven by news, with a tendency to shift downward. Any hawkish comments from ECB officials this week could lead to another test of yesterday’s lows.

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