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Party 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.

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