Weekly Economic Update: May 16, 2022
• Yields fell over the week with the two-year Treasury note decreasing by 19 basis points to 2.52% while the five-year note fell by 22 basis points to 2.86%.
• Headline CPI advanced by 0.3% in April which appeared soft on the surface however, energy was a large drag as core CPI increased by a robust 0.6% doubling March’s reading.
• The ongoing shift in demand from goods to services continues to sustain upward pressure on prices with annual inflation for core services advancing by 4.9% - a rate not seen in more than 30 years.
•With inflation continuing to erode consumer purchasing power, the University of Michigan household sentiment index showed a steep drop of 6.1 points hitting a 10-year low, which should not come as a surprise as real hourly earnings have decreased for 13 consecutive months.