Weekly Economic Update: March 14th, 2022
• Yields surged higher during the week with the two-year Treasury note rising by twenty-six basis points to 1.75% while the five-year note increased by thirty-one basis points to 1.95%.
• CPI advanced by 0.8% in February and 7.9% over the previous twelve months marking the highest readings in four decades, what’s more is that the advances do not include the recent spike in food, energy and commodity prices related to the Russian invasion of Ukraine.
• Inflation is not showing any signs of slowing with economists expecting a 10% reading on the February producer price index set to come out tomorrow while expectations are also picking up in the bond market as the 5-year break even rate touched levels last week not seen in almost twenty years.
• The FOMC will meet this Tuesday and Wednesday where it is widely expected they will hike the fed funds rate by 25 basis points marking the hike in three years - and despite the heightened risk of a policy error stemming from the ongoing war in Ukraine, markets are pricing in approximately six consecutive hikes in 2022.