Weekly Economic Update: January 31st, 2022
• Yields continued their march higher over the week with the two-year Treasury note rising by fourteen basis points to 1.16% while the five-year note increased by six basis points to 1.62%.
• The Federal Reserve concluded their first two-day meeting of 2022 on a hawkish tone as Chair J. Powell noted the lopsided risks presented by the current inflation surge and signaling that the Fed will be ready to hike at their next meeting poised for March 15-16.
• Though the FOMC had telegraphed their intentions for some time, volatility in markets spiked as Chair Powell delivered remarks in the post meeting conference where he did not rule out the need for more aggressive tightening nor the possibility of a 50 basis point hike in early 2022.
• GDP grew by 6.9% in the fourth quarter of 2021 with inventories accounting for 4.9% of growth as companies restocked nearly depleted inventory levels caused by recent supply chain woes and stimulus driven demand.