Market Updates

Weekly Economic Update: July 19th, 2021

• Front to medium term yields exhibited little change over the week as the two-year Treasury note increased by two basis points to 0.24% while the five-year note fell by one basis point to 0.78%.

• The inflation debate remains front and center as headline CPI in June increased by 0.9%, the largest one month change since June 2008.

• Fed Chair Powell recognized the outsized increase in CPI but reaffirmed that the Fed sees the drivers of inflation as transitory while also mentioning that they would not hesitate to use their tools to combat inflation if it were to become more persistent and embedded in expectations.

• With the labor market far from healed, rising case counts and the spread of the new Delta variant pose potentially significant downside risks to the economic recovery.

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