Interest rates rose in April, with the 10-year Treasury yield piercing the 3.0% level for the first time since 2014, before closing the month at 2.94%. The slope of the 2- to 10-year portion of the yield curve changed little; the 10- to 30-year curve flattened. Despite the rise in rates, the bond market appeared to shrug off stock market volatility and the trade war rhetoric that dominated the news early in the month.
Inflation returned as a focal point for the market in April. Core Personal Consumption Expenditures (PCE) inflation is now at a 1.9% year-over-year rate. Headline Consumer Price Index (CPI) is at 2.4%. Producer Price Index (PPI) numbers rose, as did oil and a number of other commodity prices. Wage growth has generally remained constrained, but the Employment Cost Index increased above expectations, an indication that wage pressures are beginning to build, given the tight labor market. The 10-year TIPS breakeven rate moved up 14 basis points (bps) to 2.18%.