We systematically track the evolution of financial conditions and their underlying drivers. We intend to share regular updates of these systematic monitors with our donors on a more exclusive basis (so long as it does not compromise our public mission). This monitor is a reflection of how we think macroeconomic and policy dynamics are affecting financial conditions and, by extension, our assessment of the economic growth outlook.


  • Capital market conditions were relatively unchanged in the week preceding the May FOMC meeting: Treasury yields drifted lower this past week, but asset prices were otherwise little changed. While the incoming macroeconomic data sent mixed signals for Fed policy (weaker Core Services Ex Housing PCE, but stronger Employment Cost Index), the failure of First Republic Bank appears to be weighing on interest rate expectations.
  • Growth expectations are roughly flat this week: The data flow in the past week continues to be mixed. Soft data has been structurally weaker but troughing. Hard data is structurally stronger but is likely to see more deceleration in the coming months.
  • Commodity Price Dynamics To Watch: Jet fuel and diesel prices still making new lows and are now well-off their historic highs. With the caveat that prices tend to go up like rockets and down like feathers, these two dynamics should help to lower goods and airfare inflation. Steel prices are also showing signs of topping out. On the upside, risks are still concentrated in cattle and sugar prices.

The full version of this Financial Conditions Monitor is made available exclusively for our Premium Donors. To view the full version, sign up here for a 30-day free trial or contact us for more information.