On Monday, Flash PMIs will be released for several countries, including the US. These indicators give us quick insights into economic activity, especially regarding inflation, which could impact market trends for the month. On Tuesday, Canada’s CPI data will take the spotlight. The last rate was 3.1%, which is above the Bank of Canada’s target range. If inflation remains high, it could lead to a shift in market expectations toward a more aggressive stance. Wednesday highlights Australia’s Monthly CPI, which is important ahead of the Reserve Bank of Australia’s policy meeting. Market predictions suggest a possible rate cut, but higher inflation data could change those expectations. On Thursday, we will see US Jobless Claims, which are essential for understanding the labor market’s health. A strong job market might prevent the Federal Reserve from cutting rates, even with inflation caused by tariffs. Also, the US Final Q1 GDP report will be released, but traders consider it outdated as they focus on future trends. Friday wraps up the week with the Tokyo Core CPI, US Core PCE, and US Final UMich Consumer Sentiment data. Tokyo’s CPI is an early indicator for Japan’s inflation, while the US Core PCE is crucial for the Fed’s inflation goals. The UMich Consumer Sentiment can influence support for risk assets if expectations about inflation decrease. Overall, this week is packed with economic data that could affect market positions. Monday’s Flash PMIs will provide early insights into manufacturing and service activity across major economies. They can signal not only growth but also whether prices are rising. A rise in input costs within PMIs indicates inflationary pressure, leading to increased attention on short-term interest rates. By Tuesday, the focus turns to Canada. The Consumer Price Index will be vital in checking whether inflation trends are aligning with the central bank’s target. A higher reading that contradicts recent global trends could make markets reassess their expectations of a dovish central bank, pushing rate insurers—especially those in short-term swaps—to either cover their positions or prepare for increased rate hike risks. Midweek, attention shifts to Australia’s numbers with the RBA meeting approaching. While the monthly CPI isn’t as detailed as quarterly results, it can signal potential inflation surprises. If it indicates rising price pressures, market bets for a supportive policy may need to be reevaluated. Thursday brings high-frequency data, with US Jobless Claims likely to impact market sentiment. Recently, low claims have shown that employers are hesitant to lay off workers, despite slower revenue growth. This strength in job retention offers the Fed some leeway to keep rates steady, even if inflation remains unexpectedly high. Meanwhile, the final GDP estimate for Q1 usually doesn’t generate much reaction unless there’s a significant revision, as most traders rely on more current indicators. Still, small shifts in consumption data can adjust expectations for the second quarter. As Friday approaches, attention will be on whether inflation expectations are becoming unstable. The Tokyo Core CPI often provides early signals of broader trends in Japanese prices. With the Bank of Japan’s recent trends, any increase here will likely get more scrutiny. In the US, the Core PCE will give a clear view of underlying inflation trends, influencing how we hedge against Fed actions. If the month-over-month reading is high again, strategies based on expected disinflation might not perform well. Finally, the University of Michigan’s final consumer sentiment report—especially the inflation expectation components—can either reinforce or challenge earlier views from the week. If long-term expectations are lower, it could ease pressure on the central bank, giving more flexibility for risk preferences in investment portfolios. At that point, thoughts on inflation psychology will matter for broader asset pricing, not just policy rate paths.

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