Weekly Economic Update: April 17, 2023
• Yields finished the week higher with the two-year Treasury note rising by 14 basis points to 4.11% while the five-year note bounced 10 basis points to 3.61%.
• Headline CPI advanced by 0.1% vs an expected 0.2% as the deflationary process remains underway, however it should be noted most of the retreat was due to falling energy prices which have since been reversed due to OPEC+ production cuts announced earlier this month.
• Core CPI, which excludes more volatile food and energy prices advanced in line with expectations at 0.4%, still far outside of the Fed’s comfort zone and it is expected they will follow through with another 25 basis point Fed funds rate hike at the upcoming May meeting.
• Retail sales retreated -1.0% vs an expected -0.5% as the pullback in consumer spending accelerated and to no surprise, the drop in spending was led by big ticket, interest rate sensitive goods.