Weekly Economic Update: May 2, 2022
• Yields were mixed during the week with the two-year Treasury note falling by five basis points to 2.65% while the five-year note increased by three basis points to 2.96%.
• Real GDP contracted by 1.4% led by a drag from trade and inventories as robust demand in the US drove imports coupled with soft demand overseas while businesses struggled to replenish inventories.
• The personal savings rate fell to a pre-Covid low of 6.2% suggesting consumers are tapping into their savings to support current spending as inflation continues to erode household purchasing power with real spending in March advancing by only one third of the nominal print at 0.2% versus 0.6%.
• The FOMC meets this week on Tuesday and Wednesday where a 50 basis point hike in the Fed funds rate to an upper bound of 1% is widely expected as they continue to battle inflation.