The extra yield investors demand to own junk bonds instead of Treasuries widened by 45 bps yesterday, to 386 bps.

“When you look at the balance of the dual mandate right now, it is certainly much more challenging. I think the Fed is going to have to practice much more patience from here.”

Fed officials must decide this year whether to lower interest rates further to support the economy, or keep them elevated for longer to contain inflation. First they need to determine what proportion of inflation is tariff-related and whether that increase is temporary.

“Despite policy uncertainty and downbeat consumers, the March top-line number was a good one for the economy and employers of all sizes, if not necessarily all sectors.”