In last week’s Market Update, we wrote about how the market seemed to be taking a breath. Well, since then, the yield on the 10-year has increased by over 27 basis points (bps). Early this week, retail sales came in with another upside surprise, showing that the American consumer continues to spend despite increasing borrowing costs. As various economic reports consistently affirm the strength of the economy, Fed governors persist in advocating for a more hawkish stance, underscoring their commitment to the Fed's 2% mandate.

In the FOMC minutes released on Wednesday, participants made a point to emphasize that they will remain data-dependent when considering any additional rate hikes. The minutes stressed what Powell had said at his last press conference: they continue to see a 'significant' upside risk to inflation. It is becoming increasingly difficult to discern how the Fed can pivot from the current policy with inflation still above target and the economy and labor market as resilient as they have been.