Market Update
Fed Remains Hawkish Following 50bps Hike
2022-05-25
This morning equity markets edged up and Treasuries yields are relatively unchanged with the 10-year yield trading near 2.75%. The latest inflation data continues to run hot, although it has moderated from the highs and recent employment data remains strong. Both of these trends are pushing yields up as the Fed is set to continue tightening monetary policy at a rapid pace, with expectations of another 50bps hike at the next two FOMC meetings this summer. Already this year, the Fed has hiked rates 0.75% and outlined the beginning of its balance sheet reduction. Currently, the market expectations are for an additional rise of +1.50% in Fed Funds this year. The questions of how significant an impact the conflict in Ukraine will have, and how persistent elevated inflation will be, particularly as the Fed quickly tightens monetary policy, remain key questions on investors minds. So far in US over 77% US adults have received at least one dose of a COVID-19 vaccine and all American adults are eligible to receive a vaccine. To date, the US has recorded over 83.5 million coronavirus cases and more than 1,002,000 deaths according to data from John Hopkins.
-CMS Staff
Treasury Yields
Benchmarks
Term Current Last Month
3 Month 1.05% 0.80%
6 Month 1.47% 1.48%
2 Year 2.49% 2.62%
5 Year 2.72% 2.85%
10 Year 2.75% 2.82%
30 Year 2.96% 2.84%
PRIME: 4.00%
DJIA: 32,057.19
Crude Oil (WTI): $109.99
YEN: 127.3700
Gold: $1,850.20
1 Year CMT: 1.96%
1 Month LIBOR: 1.0166%
Fed Funds Effective: 0.83%
Next FOMC Meeting: June 14-15th, 2022
Source: Bloomberg
Economic Calendar- Week of 5/23/2022
5/23/2022 Chicago Fed National Activity
5/24/2022 Manufacturing PMI
Markit Composite PMI
Services PMI
New Home Sales MoM
New Home Sales
Richmond Manufacturing Index
Richmond Manufacturing Shipments
Richmond Services Index
5/25/2022 MBA Mortgage Applications
Core Durable Goods Orders MoM
Durable Goods Orders MoM
Durables Excluding Defense MoM
Goods Orders Non Defense Ex Air MoM
FOMC Meeting Minutes
5/26/2022 Initial Jobless Claims
Continuing Jobless Claims
Core PCE Prices
Corporate Profits
GDP QoQ
GDP Price Index QoQ
GDP Sales
PCE Prices
Real Consumer Spending
Pending Home Sales MoM
Pending Home Sales Index
KC Fed Composite Index
KC Fed Manufacturing Index
5/27/2022 Core PCE Price Index MoM
Core PCE Price Index YoY
Goods Trade Balance
PCE Price Index MoM
PCE Price Index YoY
Personal Income MoM
Personal Spending MoM
Real Personal Consumption MoM
Retail Inventories Ex Auto
U. of Mich. Consumer Expectations
U. of Mich. Consumer Sentiment
U. of Mich. Current Conditions
U. of Mich. 1 Yr Inflation Expectations
U. of Mich. 5-10 Yr Inflation Expectations
Forecast Actual Prior Revised
0.47 0.44 0.36
57.5 57.5 59.2
53.8 56.0
55.2 53.5 55.6
-16.6% -8.6% -10.5%
750k 591k 763k 709k
9 -9 14
-14 17
8 13
-1.2% -11.0%
0.6% 0.3% 1.2% 1.1%
0.6% 0.4% 0.8% 0.6%
1.0% 0.3% 1.4% 1.2%
0.5% 0.3% 0.9% 1.1%
200k 218k
1,310k 1,317k
5.20% 5.20%
-1.3% -1.4%
8.0% 8.0%
-0.6%
7.0%
2.7%
-2.0% -1.2%
103.7
25
28
0.3% 0.3%
4.9% 5.2%
-$127.12b
0.9%
6.6%
0.5% 0.5%
0.7% 1.1%
0.2%
-2.0% 2.5%
56.3 56.3
59.1 59.1
63.6
5.4%
3.00%