Financial markets are experiencing heightened volatility and tighter conditions as central banks employ more restrictive monetary policies to combat persistent inflation. The conflict between Russia and Ukraine has exacerbated inflationary pressures, particularly with energy and commodities, and strict COVID lockdowns in China are intensifying distressed supply chains.
Financial market participants continued to assess the impact of higher energy prices and new inflation data on the economy and the future path of interest rates this week. US inflation data was worse than expected in May, hitting a 40-year high with broad based price increases for most goods and services.
This morning the market digested updates on inflation and the health of the US consumer with the Personal Consumption Expenditures (PCE) Price Index for April coming in lower than the previous month, but still running well above average at +6.3% year-over-year.
