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CPI and J&J Can’t Derail Stocks Record Highs

Equities and Treasurys rally
Equities resumed their trek to record-breaking highs while U.S. Treasurys rallied on inflationary data and vaccine news. The CPI came in slightly above expectations, increasing 2.6% YoY (+2.5% expected), but it wasn’t enough for investors to view inflation as an immediate risk to equities, with the S&P closing on a record high. Yields decreased across the curve with the CDC and FDA recommending a pause in the use of the Johnson & Johnson one-shot COVID vaccination. The 10y finished down 5bps to close at 1.62%.
CDC and FDA recommend a pause on Johnson & Johnson one-shot use
Aside from the concern over the U.S. COVID weekly death roll rising for the first time since February, U.S. officials are now investigating a blood-clot complication related to J&J’s one-shot use. Currently, six women between the ages of 18 to 48 who have received the shot have experienced brain blood clotting complications. The CDC and FDA have recommended that healthcare providers pause giving the vaccine. The J&J vaccine is now the second vaccine to show potential blood clotting issues following complications with AstraZeneca’s vaccine abroad.
CPI highest since March 2012
The headline consumer price index rose 0.6% month-over-month and 2.6% year-over-year in March, with core CPI increasing 1.6% YoY. As CPI data is expected to be unusually high between March and May due to the pandemic’s effect on prices a year earlier, the slight beat in inflation did not deter investors’ appetite for equities.

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