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In the first quarter of 2024, the US economy grew at a slower rate than expected, with an annualized rate of 1.6% per cent. Despite this disappointing growth rate, price pressures were higher than anticipated. The release of inflation data raised concerns about US Federal Reserve rate cuts. Senior global market strategist at Wells Fargo, Sameer Samana, described the situation as “almost stagflationary,” with slowing growth and sticky prices challenging the Fed’s hopes.

Following the data release, US stock futures declined and government bonds faced pressure. Yields on two-year US Treasuries rose, reflecting investors’ reaction to the news. Despite a strong labor market and high levels of consumer spending in the US, concerns remain about bringing down inflation to the Fed’s 2% target. President Joe Biden hopes that a robust economy will boost his chances in the upcoming election but borrowing costs are at a 23-year high and traders are adjusting their expectations for Fed rate cuts due to persistent inflation. Stay tuned for further updates on this unfolding story.