Financial markets were mixed this week as Treasury yields increased amid ongoing developments in the Russia-Ukraine war and its impact on the global economy. The U.S. Treasury yield curve flattened as 2-year Treasury yields increased to approximately 2.30% while the 10-year Treasury yield increased to around 2.55%.
The Consumer Price Index headlined the economic data releases this week and although U.S. consumer prices were in line with expectations, inflation hit a 40-year high. The Consumer Price Index (CPI) was up 7.9% year-over-year in February, versus a 7.5% year-over-year gain in January. Core CPI (CPI less food and energy) was up 6.4% year-over-year in February, versus up 6.0% in January.
Fed policymakers have recently pivoted toward a more hawkish stance as inflation indices continue to run hot and the labor market appears relatively tight, given their dual mandate of promoting maximum employment and stable prices.
