Weekly Economic Update: April 18th, 2022
• The yield curve steepened during the week with the two-year Treasury note falling by two basis points to 2.45% while the five-year note increased by ten basis points to 2.79%.
• CPI advanced by a robust 1.2% in March lead by food and energy as exemplified by core inflation which was much more tame advancing by only 0.3%, however, the core inflation print should be interpreted with caution as it was driven by an outsized drop in used car prices.
• Real purchasing power has continued to erode falling 2.7% from a year ago and even though goods prices are levelling out, service prices have gained considerable momentum as core services increased by 0.6% - the largest one month increase in thirty years.
• The Fed is expected to hike the Fed funds rate by a full percentage point over their next two meetings as they attempt to quash inflation while taking care as to not steer the economy into recession, something that has yet to be accomplished anytime inflation has exceeded 5%.