Finance

The personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, rose 0.7% in March, marking its largest monthly gain since mid-2022. On an annual basis, PCE inflation jumped to 3.5%, largely fueled by a 24.1% surge in retail gasoline prices resulting from ongoing conflict in the Middle East. This acceleration has solidified market expectations that interest rates will remain unchanged well into next year as the central bank navigates persistent price pressures.

Brent crude prices climbed to roughly $114 per barrel as prospects for a swift reopening of the Strait of Hormuz faded following reports of potential U.S. military escalation. The ongoing blockade of Iranian ports has pushed domestic energy costs higher, with the U.S. national gas price average rising nearly 30 cents in a single week to $4.30 per gallon. Energy sector stocks have benefited from this volatility, with the Energy Select Sector SPDR advancing over 2% even as broader markets remain mixed.

The 10-year Treasury yield hovered around 4.40% after reaching its highest levels in a month, reflecting investor concerns over persistent inflation and a hawkish Federal Reserve stance. Although first-quarter GDP growth missed consensus estimates at an annualized 2%, the data showed a notable pickup from the previous quarter's sluggish pace. High energy prices continue to drive yield volatility, tracking closely with crude oil movements as markets price in a higher-for-longer interest rate environment.