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

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%