Kevin Warsh was finally confirmed by the Senate as the new chair of the Federal Reserve this week by a narrow 51-45 margin. For market participants, however, inflation data took center stage, reinforcing concerns that the energy price shock from the conflict with Iran is filtering into the broader U.S. price complex. The headline Consumer Price Index (CPI) rose 0.6% in April and 3.8% year-over-year, while core CPI, excluding food and energy, advanced 0.4% on the month and 2.8% from a year ago, both above consensus. The April Producer Price Index (PPI) was the more troubling release, with final demand prices climbing 1.4% on the month, nearly three times the 0.5% consensus, and 6.0% year over year. Core PPI rose 1.0% and 5.2%, also well above expectations. A 1.9% rise in import prices reinforced the view that cost pressures are no longer confined to energy. 

The remainder of the week’s data pointed to an economy which continues to absorb these pressures without obvious damage. April retail sales rose 0.5%, in line with expectations, following a downwardly revised 1.6% gain in March, with the control group measure that feeds into gross domestic product advancing 0.5%. The May Empire Manufacturing index jumped to 19.6, well above the 7.2 consensus, while April industrial production rose 0.7% versus the 0.3% expected and capacity utilization climbed to 76.1%. Labor data remains constructive, with initial jobless claims at 211,000 for the week ending May 9 and continuing claims of 1.78 million. Existing home sales rose to a 4.02 million units annualized pace, and NFIB Small Business Optimism edged up to 95.9. 

Treasury yields rose sharply on the hot inflation prints, with the 2-year Treasury yield climbing approximately 20 basis points on the week to 4.08% and the 10-year rising approximately 22 basis points to 4.58% at the time of this writing. Despite the move in yields, the S&P500 gained approximately 0.2% to near 7,410, a fresh record. supported by resilient corporate earnings. West Texas Intermediate crude oil settled near $104 per barrel, up roughly $10 from the prior week as the fragile U.S. and Iran ceasefire was tested by renewed missile activity in the Gulf. Gold pulled back to approximately $4,528 per ounce as the dollar strengthened, and real yields rose. 

The Chandler team views this week’s hot April PPI print, sticky core CPI, and rising import prices as a clear signal that the window for Federal Reserve easing in 2026 has narrowed further. With the federal funds rate at 3.50% to 3.75% following the April 29 Federal Open Market Committee meeting, we expect the Committee to remain on hold through our six-month forecast horizon. Beyond this, we still expect the next move from the Fed to be an ease which should allow the yield curve to steepen. gradually. Portfolios remain positioned with an emphasis on safety, liquidity, and disciplined credit risk management.