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Interest Rates and Economy 

Week of March 20, 2023

Interest Rates & Economy

Interest Rate Update (1)

  • The collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank has tempered rate hike expectations for the Mar. 22 Fed Meeting. The CME Group is now pricing in a 25-bp increase at either the Mar. 22 or May 3 meeting, compared to the 50-bp increase projected up until March 8, the date of the first bank collapse in 2023 (Silvergate). Following, cuts of 50 bps are expected in the latter half of the year.  

  • The 2-yr Treasury (UST) fell 79 bps since last month to 3.81%. The 10-yr UST yield is 3.39% and the 30-yr UST is 3.60%, representing a month-over-month (“MoM”) decrease of 43 bps and 28 bps, respectively.  

  • The 2-yr MMD fell 26 bps MoM to 2.53%. The 10-yr MMD fell by 11 bps MoM to 2.38% and 30-yr MMD is 3.42%, a MoM decrease of 8 bps.   

  • 1M LIBOR increased MoM by 11 bps to 4.71% and 1M Term SOFR increased 18 bps to 4.74%. SIFMA fell 136 bps MoM to 2.62%, returning from its peak in February.

Economic And Financial Update

  • Yields across the Treasury curve fell sharply in response to the bank collapses, as investors flocked to safe-haven assets at the expense of risk assets. The short-end of the curve, particularly 2-yr, experienced high volatility and is expected to remain more volatile through 2023. Muni bond yields have moved slightly lower in response also, despite upward pressure from muni bond fund outflow data in the last three weeks.


  • Inflation continued to slow for the eighth consecutive month. The February Consumer-Price Index (“CPI”) rose 0.4% for the month and rose 6.0% year-over-year. It marked the slowest annual inflation rate since September 2021 (3).


  • The Producer Price Index (“PPI”), a measure of what raw goods fetch on the open market, fell 0.1% in February against market expectations of an increase of 0.3%. The reading is hopeful in the Fed’s efforts to bring down inflation and it reduces rate hike pressures through the end of the year (3).

Target Rate Probabilities for March 22, 2023 Fed Meeting (2)

Wall Street Forecast (1)

  1. Rates and ranges as of March 17, 2023

  2. Source: CME Group’s FedWatch Tool as of March 17, 2023

  3. U.S. Bureau of Labor Statistics

  4. Additional sources: Bloomberg, Refinitiv/TM3 

Key Rate Updates

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Source: U.S. Department of the Treasury, Bond Buyer, Investment Company Institute, Bloomberg and Refinitiv/TM3 Data as of March 17, 2023.

On the afternoon of March 22, the Fed hiked by 25bps which was in line with market expectations.

(1)   Weekly SIFMA and SIFMA/1M-LIBOR as of March 15, 2023

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