The Eurozone’s core Harmonized Index of Consumer Prices increased by 1% in March, up from 0.5% previously reported. This change reflects ongoing inflationary trends within the region.
In the United States, the Job Openings and Labor Turnover Survey (JOLTS) is anticipated to show a decline in job openings, expected to reach 7.63 million by the last business day of February. Concerns are rising among economists regarding a potential recession, particularly with new tariffs coming into effect on April 2.
Eurozone Inflation Momentum
That reported 1% monthly rise in the Eurozone’s core Harmonised Index of Consumer Prices (HICP) isn’t just a figure thrown into the mix—it adds weight to an inflation trajectory that remains stubbornly persistent. Core HICP, which deliberately excludes volatile food and energy prices, gives us a clearer picture of supply and demand dynamics beneath the surface. This upswing, from an already considerable 0.5%, can be interpreted as subtle reinforcement of ongoing price pressures, particularly in non-energy sectors like services and industrial goods.
We should also take note of the timing. March’s figure appears just as the European Central Bank edges closer to rate-setting decisions later this quarter. Any element that complicates the path towards disinflation could sharpen market sensitivity—especially short-term rates markets, where front-end pricing becomes increasingly responsive to macro releases. Price action around near-term Euribor or Schatz futures could reflect this, especially if future prints confirm that underlying prices aren’t softening quickly enough.
The focus in the United States, meanwhile, shifts to the labour market’s temperature. The projected drop in job openings, as shown in the forthcoming JOLTS report, is not to be dismissed as seasonal noise. February’s estimated 7.63 million level would mark a further downshift from post-pandemic peaks, aligning with broader signals that labour demand may be losing steam. The market has often leaned on this report as a leading indicator, and while hiring remains positive, the decline in available positions suggests that employers are beginning to pull back modestly.
Labour Market Pressure Points
This development is timely against a backdrop of policy and trade changes. Tariffs due to hit in early April add another filter through which corporate confidence may weaken. If businesses expect input costs to rise or earnings to be pinched by retaliatory measures, hiring plans might be the first to tighten. That uncertainty lingers close to the surface—and market participants can often price it in earlier than policy responses.
As implied volatility rises around macro-driven events, carry trades and calendar spreads in both USD and EUR fixed-income products could become temporarily dislocated. We might see a widening between the implied and realised volatility in short-end curves as traders adjust expectations around both inflation stickiness and potential labour market softening.
In these moments, the edge often lies not just in reacting to the data but anticipating how the data might alter risk tolerance or pricing assumptions. While inflation in the Eurozone continues to firm up, and job openings in the US begin to show signs of exhaustion, we’re beginning to see diverging paths in central bank expectations—each with its own implications for rate differentials and short-dated options strategies.
