Yields rise ahead of US-Iran talks this weekend. Treasury yields initially dipped 1bp in the immediate aftermath of hot (but better than expected) CPI data, though price action quickly reversed course. Yields climbed throughout the remainder of the session as markets looked ahead to US-Iran negotiations this weekend. The 2-year yield closed 3 bps higher at 3.80% (down 4 bps on the week), while the 10-year yield closed 4 bps higher at 4.32% (down 2 bps on the week). Meanwhile, University of Michigan April consumer sentiment data plummeted to 47.6 from 53.3 in March, driven by inflation concerns from the Iran War, though the data did not trigger meaningful rates movement. Equities closed out their best week of 2026 so far, with the S&P 500 (6,817) and NASDAQ (22,903) up 3.56% and 4.68% on the week, respectively.
CPI surges on rising energy prices. US inflation rose sharply in March as the consumer price index increased 0.9% MoM, significantly above February’s 0.3% and the largest monthly increase since 2022. According to the BLS, nearly 75% of the increase was attributable to higher gas prices. Meanwhile, core CPI, which excludes volatile food and energy prices, rose just 0.2% MoM. On an annual basis, CPI increased 3.3%, up from 2.4% in the prior month and the fastest pace since 2024, while core CPI increased 2.6% YoY. Despite a 21% jump in gas prices, grocery costs fell 0.2% in March, as meat, dairy, and egg prices declined. Experts note it could take up to a year for the impact of fertilizer costs, an important input for grocery prices, to be fully reflected in CPI data. Airfares rose 2.7% from February, while used car prices declined for the fourth consecutive month.
Iran War negotiations set to begin tomorrow in Pakistan. Amid the two-week US-Iran ceasefire, both nations are expected to engage in negotiations tomorrow in Islamabad, Pakistan’s capital. Vice President JD Vance will lead negotiations for the US while Iranian Parliament Speaker Mohammad Bagher Ghalibaf and Foreign Minister Abbas Araghchi will lead Iran’s delegation. Vance shared that President Donald Trump provided “clear guidelines” for him to follow in the talks. Trump also posted on social media that Iran’s only leverage is the “short term extortion of the world” using the Strait of Hormuz, while Ghalibaf posted that ceasefire in Lebanon and the “release of Iran’s blocked assets” must be fulfilled before negotiations start. Meanwhile, ceasefire negotiations between Israel and Lebanon will begin next Tuesday, according to Lebanon’s presidential office, with the US as mediators.