A quieter week is coming up after the NFP release, with Monday a public holiday in many European countries for Whit Monday. On Tuesday, Australia will share the Westpac consumer sentiment index, while the UK will release data on average earnings index (3m/y), claimant count change, and unemployment rate. Wednesday will concentrate on U.S. inflation data, and on Thursday, the UK will report its monthly GDP m/m. The U.S. will present the PPI m/m along with weekly unemployment claims. On Friday, we’ll see the early University of Michigan (UoM) consumer sentiment and UoM inflation expectations. Australia’s previous Westpac consumer sentiment rose by 2.2%. Recent events include a 25 bps rate cut by the RBA and disappointing Q1 national accounts, indicating economic challenges. In the UK, the average earnings index (3m/y) is expected at 5.3%. The claimant count change is forecasted at 9.5K, with the unemployment rate at 4.6%. For the U.S., the core CPI m/m is projected to be 0.3%, up from 0.2% last month. The CPI y/y is anticipated to rise from 2.3% to 2.5%. This data will shed light on the effect of tariffs on consumer prices, especially on core goods. The U.S. core PPI m/m is estimated at 0.3%, with the overall PPI m/m at 0.2%. The recent drop in headline PPI hints at hidden inflation pressures due to tariffs. Looking ahead, this week’s lighter economic calendar will help clarify trends in rates and inflation after last week’s non-farm payrolls. With many European nations observing Whit Monday on Monday, we can expect lower trading volumes early in the week. This might lead to choppy trading before macro events pick up from Tuesday. Australia’s consumer sentiment figures on Tuesday will provide insight into the public’s willingness to spend amid slowing growth. After a 2.2% increase last month, the response to weak Q1 data and the RBA’s recent quarter-point cut will be crucial. It’s more about trend shifts than absolute numbers. A negative result after last month’s rise would signal fading confidence and support a dovish stance from the RBA. If the figure falls below expectations, watch for lower yields on Aussie front-end rates. UK labor data on Tuesday may influence the British pound and front-end gilt pricing. With earnings projected at 5.3% and unemployment at 4.6%, this may favor hawks. However, if real pay continues outpacing inflation, the Bank of England’s hiking plans could face scrutiny. If claimant numbers exceed the predicted 9,500, it may suggest a loosening job market, which could deter further tightening. In this scenario, expectations for rate hikes may weaken, especially if GDP falls short on Thursday. Wednesday’s U.S. CPI numbers will be significant. With a predicted core inflation of 0.3% m/m and a year-on-year estimate of 2.5%, we’re seeing renewed concerns about core price stability. Last month’s number was 0.2%, so this small change will draw attention. The market will be particularly alert to categories affected by tariffs, like apparel and household goods. We shouldn’t expect widespread disinflation yet, especially with geopolitical risks affecting supply chains. Collectively, we’ll watch not just the final number but also how sticky these inputs seem—especially if service inflation picks up. Thursday’s dual reports on U.S. PPI and weekly jobless claims will further illuminate the inflation landscape. A core PPI of 0.3% would align with CPI momentum. If both show upward risks, it could delay Fed rate cuts. Earlier, a drop in headline PPI led to assumptions of soft underlying inflation, but revised prices and freight costs may challenge that view. A print at or above expectations could boost support for longer-term Treasury yields. Friday will conclude with initial figures from the University of Michigan, providing insights into sentiment and inflation expectations. These softer indicators are increasingly relevant as hard data shows decreasing momentum. Long-term inflation expectations have risen in recent quarters. If that trend continues, markets may need to rethink how anchored those expectations are. A surprising rise in expectations wouldn’t just reinforce core inflation persistence but could also reignite concerns about stagflation risks. Traders using options and volatility products should remain agile. A complacent stance on macro volatility could quickly backfire if any indicators deviate from expectations. As we prepare for these key releases, especially the inflation data, a responsive approach might be more effective. We’ll compare expectations with actual results to evaluate adjustments in short-term rate curves. Holding a firm bias appears increasingly risky unless positioning is tight.

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