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MARKET UPDATE

Inflation Edges Lower But Remains Sticky

5.29.2024

This morning equity markets moved lower and Treasury yields are up with the 10-year yield trading near 4.60%.  The latest CPI data was in line with expectations, following recent readings that have continued to be elevated, but substantially lower than the 40-year highs of summer 2022.  Nonetheless, the current level of 3.4% YOY remains stubbornly above 3.0%, well above the Fed's 2% target.  On the other hand, jobs and unemployment data continue to come in better than expectations after modest weakening in fall 2023.  All indications suggest that rates are likely to move lower next, as inflation eases and the labor market begins to slow at a gradual pace.  Since early 2022, the Fed has rapidly tightened monetary policy, with the cumulative amount of hikes at 5.25%.  And at the last FOMC meeting, they announced no change in target rate.  The Fed remains committed to bringing inflation down to their 2% target and it may be that rates stay in their current range for longer than the market is expecting.  However, the economic data continues to be encouraging and trend in the right direction.  Concern persists that inflation is sticky, but fears about a near term recession have abated.  It appears that the Fed will achieve a "soft landing", where inflation is tamed without pushing the economy into a recession.

- CMS Staff

TREASURY YIELDS

Term

3 Month

6 Month

2 Year

5 Year

10 Year

30 Year

Current

5.39%

5.39%

4.98%

4.63%

4.61%

4.73%

Last Month

5.39%

5.37%

4.97%

4.65%

4.61%

4.73%

BENCHMARKS

PRIME:

DJIA:

Crude Oil (WTI):

YEN:

Gold:

1 Year CMT:

1 Month T-Bill:

Fed Funds Effective:
Next FOMC Meeting:

8.50%

38,504.51

$79.33

157.6200

$2,340.68

5.22%

5.353%

5.33%

June 11-12, 2024

Source: Bloomberg

ECONOMIC CALENDAR
Week of 5/27
/2024

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