Rising bond yields remain a drag for equity valuations, with Treasury 10-year yields near their highest since late 2023 at 4.7840%. A high CPI reading would likely see yields edge closer to the psychological 5.0% barrier.
For the Federal Reserve, last week's upbeat payrolls report has left markets pricing a 58% chance of a hike when it meets on September 16, and 70% for a move in October.
Bruce Kasman, global head of economics at JPMorgan, is looking for core CPI to rise 0.21% which he thinks would be low enough to keep the Fed on hold, if only for now.
Likewise, markets are pricing in a 75% chance the Bank of Japan will raise rates a quarter point at its meeting on September 18, with a 60% probability of another move by December.
"Central bank patience through the energy shock has been supportive of asset prices and the credit cycle," said Kasman. "However, central banks are now on the move."
"We forecast two more hikes from the ECB and BoJ before year-end," he added. "There is also a strong case for the Fed to move earlier and more aggressively than our baseline forecast for a December hike."
In currency markets, the dollar index got only a mild lift from the jobs report as worries about ever-growing U.S. debt and policy uncertainties erode the purchasing power of the currency.
President Donald Trump caused a stir on Friday when he warned he would cease international trade with countries running a trade surplus with the United States if the Fed did not slash interest rates as he wanted.
The dollar index stood at 99.135, not far from recent lows of 98.558. The euro held at $1.1610, within sight of the August top of $1.1711.
The dollar was a tick easier at 156.04 yen, and still threatening major support at 155.00 after losing 2.4% last week as the yen rallied on speculation about a more aggressive BoJ tightening.
In commodities, gold slipped 0.3% to $4,411 an ounce, after finding support at $4,282 last week.
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