US one-year consumer inflation expectations increased from 5% to 6.7% in April. Gold prices remain near all-time highs around $3,250, amidst strong safe-haven demand and concerns about trade wars and US inflation.
The EUR/USD pair declined to about 1.1300 after reaching 1.1473 recently. GBP/USD retreated to the 1.3050 range as the US Dollar struggled due to ongoing trade tensions and recession fears.
Bitcoin, Ethereum, Dogecoin, and Cardano showed stabilisation as the crypto market capitalisation steadied at approximately $2.69 trillion. Market sentiment about a potential recession remains cautious despite recent gains in Wall Street following a tariff delay announcement.
Inflation Expectations Surge
The sharp rise in US one-year consumer inflation expectations—from 5% to 6.7% in just a month—marks a stark increase in what consumers foresee for prices over the next year. This shift isn’t coming out of nowhere; it’s the product of sustained inflationary pressures that now seem to be sinking deeper into public sentiment. A rise of this size is a clear warning sign – it often signals that inflation isn’t easing at the pace policy-makers hoped for. When this kind of sentiment builds and spreads, it can influence wage demands, spending decisions, and ultimately the direction of monetary policy. Derivative markets that fixate heavily on rate expectations will likely need to price in more persistent inflation risk and, by extension, a tighter for longer stance from the Fed.
Meanwhile, gold sitting just below all-time highs—hovering around $3,250—shows that investors haven’t let go of their demand for assets typically thought to offer security in uncertain times. Considering the fear around rekindled trade disputes and stubborn inflation in the United States, it’s hardly surprising. What that tells us is that real rates are still not attractive enough when adjusted for inflation expectations. So, this near-record pricing doesn’t appear speculative, but grounded in wider macro anxiety. Metal derivatives tracking bullion likely won’t see a drop in demand so long as yields stay in their current range and inflation risk keeps spooking capital.
On the FX side, the EUR/USD pair has settled closer to 1.1300 after previously topping 1.1473. That kind of pullback implies a reassessment of macro conditions, likely linked to renewed US strength or unease in the eurozone. Dollar strength, despite weak recent sentiment, often rallies in tension-heavy environments. We’ve seen this pattern repeat during previous periods of geopolitical pressure or U.S. rate repricing. Derivatives tied to currency movement should monitor forward-looking indicators in both regions carefully—particularly payroll data in the US and sentiment readings in major EU economies, which could dramatically shift positioning in the options market.
The British pound has also slipped, now settling closer to 1.3050 after a rebound earlier this quarter. With the US Dollar under pressure from recession talk and an unclear path for global tariffs, this pound pullback points to defensive positioning rather than new enthusiasm for sterling assets. Powell and co. have yet to reassure markets that rate cuts are off the table this year, and as long as there’s doubt, traders will hedge accordingly. Cross-currency derivatives involving GBP may see heightened implied vols, especially across shorter maturities, if more political or economic uncertainty unfolds in either the US or UK.
Crypto Market Stabilisation
In crypto, things have calmed a bit. After weeks of wild price action, assets like Bitcoin, Ethereum, Dogecoin, and Cardano are now showing a degree of quietness. The overall digital asset market capitalisation has steadied around $2.69 trillion, suggesting that we’re in a pause rather than a shift. We read this as exhaustion from recent speculation paired with uneasiness about what might come next. The recent rise in Wall Street equities might inspire some risk-on behaviour, but with a recession still on the minds of many, any new catalyst—whether regulatory or macroeconomic—could jolt crypto implied volatilities markedly. Options pricing on high-beta tokens may already be signalling this, and we might observe shorter sprints in directional bets rather than long-term positioning for the time being.
Where Wall Street has stabilised, that has more to do with politicians stepping away from the ledge—for now. The announced delay in new tariffs has been welcomed by equities, yet fear lingers. It typically does when sentiment swings have more to do with headlines than fundamentals. For derivatives focused on index exposure—such as S&P futures or volatility contracts—there’s still a big gap between what markets expect and what they’re actually seeing. That disconnect often produces choppier conditions in near-term volatility surfaces, and that’s something to watch across macro-sensitive strategies.
