Weekly Economic Update: June 20, 2023
• Yields increased over the week with the two-year Treasury note rising by eleven basis points to 4.72% while the five-year note increased by six basis points to 3.98%.
• Headline CPI advanced in May by a tepid 0.1% as energy costs dragged while core CPI advanced by 0.4% as stubbornly high shelter costs have yet to stabilize, however, economist consensus is for rents to fall in the coming months which, barring any surprises, should provide for lower core readings in months to come.
• The Fed’s “supercore” inflation gauge that also excludes shelter from the core reading has shown significant progress falling to a 2.8% annualized rate and aligned nicely with their well-choreographed interest rate pause announced Wednesday as the FOMC opts to see how previous rate hikes permeate the real economy.
• Despite the rate pause, Fed members continued to sound a hawkish tone however, with prices moderating and wage gains softening, markets are not pricing further hikes from the FOMC with the next rate decision due to occur in late July.