Market Updates

• Yields on the front end of the curve remained unchanged as the two-year Treasury note remained constant at 0.15% while medium to longer tenures increased slightly with the five-year Treasury note increasing by three basis points to 0.81%.

• More hot inflation readings spooked equity markets earlier in the week with Core CPI registering a 0.8% increase and the Producer Price Index registering a 0.6% increase.

• A closer look into the Core CPI reading warrants less shock as nearly 40% of the increase was attributable to a jump in prices of used cars stemming from retention of rental fleets as well as chip shortages constraining new car production.

• Prices still have room to rise as key service industry prices are well below their pre-pandemic levels—prices of hotel bookings are still down 6% and airfare is still down 18% compared to February 2020 levels.