Source: US Dept. of Treasury End of Day
• Rates decreased slightly last week with the 2-year Treasury note yield falling by two basis points to 3.81% while the 5-year note fell by three basis points to 3.95%.
• March CPI staged its largest monthly gain since mid 2022, surging by 0.9% and was driven almost entirely by energy while core inflation remained contained at 0.2%, suggesting limited broad based inflation pressure.
• Higher energy prices have reduced the likelihood of near-term rate cuts, though increasing signs of demand destruction are raising recession risks and complicating the balance between inflation control and growth support.
• The energy-driven price spike materially reduced real incomes, especially for lower income households causing a deterioration in consumption growth, savings, and sentiment.
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