Perspectives
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Monthly Macro Monitor: April 2026
Read More- Energy Crisis and Volatile Geopolitical Backdrop: Global energy prices remained significantly elevated in April amid the ongoing conflict in the Middle East and the continued closure of the Strait of Hormuz. Following significant volatility in March as the conflict escalated, the announcement of a temporary ceasefire in early April, which has since been extended, calmed financial markets. Despite the market’s reversion to a risk-on sentiment in April, the global geopolitical backdrop remains fragile and volatile.
- Employment: Key employment measures released in April were stronger than expected. U.S. nonfarm payrolls (NFP) were materially above estimates and prior month levels, and the unemployment rate declined slightly month-over-month. Previously reported NFP data for January and February were revised modestly lower by 7,000 jobs in aggregate.
- Inflation: Key inflation measures released in April increased month-over-month, which was generally consistent with expectations amid the surge in global energy prices. Not surprisingly, inflationary pressures – and their implications for the Fed’s expected neutral rate level – were a primary focus during the Fed’s April 29th press conference. PCE data releases returned to the normal schedule in April with both February and March data released during the month, finally ‘catching up’ from delays caused by the government shutdown from October to mid-November.
- Federal Reserve and Monetary Policy: As expected, the FOMC maintained the 3.50-3.75% target range for the federal funds rate at its April meeting, highlighting global energy prices as a key contributor to elevated inflation measures. In his final press conference as Fed Chair, Powell acknowledged that “inflation is kind of misbehaving” and characterized the current stance of monetary policy as being “at the high end of neutral or perhaps mildly restrictive,” which “is the right place to be” and positions the Fed “in a very good place…to wait and see” as the Committee continues to assess the impacts of energy shocks and tariffs filtering through the U.S. economy. Read our April Fed Report for more details.
- Interest Rates and Agency MBS Spreads: Increased inflationary pressures caused near-term rate cut expectations to decline, driving higher interest rates across the curve. Against the backdrop of calmer financial markets, however, interest rate volatility declined month-over-month, and Agency MBS spreads to benchmark rates tightened.
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Monthly Macro Monitor: May 2024
Read MoreA quick update on the market environment, including key rate and spread trends that are top of mind for Agency MBS investors.