Volatility continued in the global markets last week as inflation concerns pressured stocks.  Stronger-than-expected US inflation data and oil supply disruption in a crucial US pipeline were keys that drove stocks lower, with the S&P 500 index finishing the week down -1.4%.  On the inflation front, core consumer prices (CPI) rose 0.8% month-over-month (4.2% annualized), the largest monthly gain since 1981. US producer prices (PPI) also surged 6.2% (annualized), above consensus as well. With the next Federal Reserve meeting not scheduled until mid-June, investors are currently in an ‘information void’ as to any monetary response or viewpoints from the central bank regarding inflation. Bond market yields were volatile last week, but settled down later in the week. The 10-Year Treasury yield reached 1.70% mid-week after the higher-than-expected inflation data, but recovered to 1.63% by week end.  Despite inflation and bond supply concerns, yields have been fairly stable, with the 10-year Treasury trading in a range of 1.60 – 1.75% for the past several weeks.

 

Sources: JP Morgan Asset Management, Goldman Sachs Asset Management, Barron’s

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