It’ll be a quieter session up ahead in the US today as we will see key market closures in observance of the Labor Day weekend. Both the NYSE and Nasdaq are shut, so there will be no regular trading in US equities today. Besides that, the options market is also closed for the holiday with normal trading only resuming on Tuesday tomorrow.

In addition, the bond market is effectively closed as well. So, that means all dollar-denominated fixed-income securities such as Treasuries, mortgage-back securities, high-yield corporate bonds, municipal bonds and parts of the money market will be shut.

Why does this matter?

To put short, when US cash equities and Treasuries are absent from trading, it means that liquidity across global markets is typically thinner on that particular day. That will be exacerbated further during North American trading hours of course.

So, what exactly does that mean? It means that price movements can be exaggerated by lighter trading volumes at times, or perhaps even see markets simply drift with little to no conviction.

In other words, today’s price action may offer up less informational value than a normal trading day – especially during US trading hours. As such, any notable movement in the likes of the dollar, gold, or equity futures should be met with some caution until deeper liquidity returns tomorrow.

It’s a shorter week but still potentially an important one

We might not see much on tap in US trading today but things now will quickly shift towards the inflation and Fed debate in the coming days.

Later on in the week, we will have the August figures for the US PPI and CPI reports due. The former is scheduled for Thursday and the much more closely watched latter release is scheduled for Friday.

These two data points in particular will carry added significance, especially consumer prices, ahead of the Fed’s next policy meeting scheduled for next week.

So while today may be a bit more subdued in terms of trading sentiment, the real action will begin when US markets return tomorrow. That before inflation takes centre stage again later in the week.

This article was written by Justin Low at investinglive.com.