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Financial markets were focused on the release of inflation data this week inclusive of both the Consumer Price Index (CPI) and Producer Price Index (PPI). The CPI increased to 0.3% month-over-month and 3.4% year-over-year in December, increasing from 3.1% year-over-year in November.

Starting off the new year, the December employment report exceeded expectations by adding 216,000 jobs to the US economy, surpassing the consensus forecast of 175,000. Leading sectors in job gains included government (+52,000, primarily from local government positions), leisure and hospitality (+40,000), and healthcare (+38,000).

Treasury yields continued to consolidate with rates ending the week marginally lower across all major benchmark tenors as the ‘holiday trading’ backdrop contributed to reduced volatility. Economic data releases were sparse but continue to show evidence of the consumers ability to navigate more restrictive monetary policy over the course of 2023.