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.
Geopolitical risk and the escalating Russia invasion of Ukraine continues to heavily influence market pricing. Financial conditions are beginning to tighten with investment grade credit spreads moving wider, elevated new issue concession in the primary market, and decreasing liquidity with wider bid/ask spreads across the fixed income universe.
The reality and human tragedy of the Russian invasion into Ukraine increased volatility in financial market this week. The onset of the invasion rattled financial markets on Thursday. Global stock markets were soft in the days leading up to the invasion but rallied late Thursday and into Friday as the initial shock receded. The yield on the 10-year US Treasury note fell to 1.84% intra- day on Thursday but was yielding 1.99% this morning , up 0.06% as flight to quality assets faded in financial markets.
