Daily Market Color January 28, 2022Party On! Equities rally into the weekend erasing weekly losses As 1990s Saturday Night Live icon Wayne Campbell would say, “Party on!” That was the vibe from equities today after posting the best day since June 2020 after a volatile week for the equity markets with the S&P erasing its losses on the week. Rates rallied across the curve with the belly of the curve seeing the most movement heading into the weekend. Even with the rally, the 2-year U.S. Treasury yield closed the week up 18 bps to close at 1.17%. Fed’s preferred inflation measure hits 39-year high. The Personal Consumption Expenditures (PCE) Price index rose to 5.8%, with core PCE (excludes food and energy) increasing to 4.9% hitting the highest level since 1983. The employment cost index also rose to a two-decade high increasing 4.0% year-over-year. As inflation hits decade highs, consumer confidence hits a decade low. University of Michigan’s consumer sentiment index dropped in January to its lowest level since November 2011. Three-quarters of participants reported that inflation is the economy’s biggest problem, while only a third believe conditions will improve over the next twelves months.
