Economic and Market Overview
April 2026
Equities rose, Treasuries sold off, and credit spreads tightened despite the lack of any apparent resolution to the conflict in the Middle East. The month concluded with plenty of intrigue surrounding Jerome Powell’s final FOMC meeting as Chairman.
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Stocks climbed steadily over the month as earlier hopes for a resolution to the war in Iran gave way to strong corporate earnings results. The S&P 500 ultimately returned 10.5% with only five days in the red, while the Russell 2000 fared even better, gaining 12.3%. Treasuries sold off for the second straight month, though this time the shift was effectively parallel, and yields rose by just mid-single digits. Credit spreads tightened early in the month and then were largely rangebound as the risk-on tone confronted heavy supply. J.P. Morgan reported $184 billion in investment-grade issuance, 92% over the average of the trailing four Aprils, and $44 of high-yield issuance, a seven-month high. WTI fluctuated with the outlook for the conflict in the Middle East, topping $110/bbl early and late in the month and falling below $85/bbl in between. Hawkish releases from central banks abroad and a warning from Fitch that the U.S.’s AA+ rating faced challenges from its growing debt burden sent the Dollar Index 1.9% lower while gold fell 1.1%.
Economic Data
Nonfarm payrolls growth rebounded to a 178k pace in March, 112k beyond the median estimate, likely due in part to a rebound from February distortions from nursing strikes and weather. The unemployment rate also surprised with a 0.1% dip to 4.3%. The release only included a 41k downgrade in February’s NFP pace (to -133k), though the net reduction for the prior two months was just -7k. Looking ahead, economists expect a 60k gain in April nonfarm payrolls and no change in the unemployment rate when data are released on May 8. Retail sales easily beat in March, even as February’s numbers were revised higher. Consumer sentiment indices were mixed again as the Conference Board reported an increase from March, while the University of Michigan’s Index hit its lowest level in the measure’s nearly 50-year history. Housing releases are still playing catch-up, but those that were announced in April were mixed again. Likewise, hard and soft data in manufacturing and services remained noisy. U.S. GDP followed a 0.5% Q4 decline with a +2.0% pace in Q1, according to the advance release, though this fell 0.3% short of forecasts. Consumers weren’t to blame, however, as personal consumption surprised 0.2% to the upside by rising at a 1.6% annualized pace.
Inflation
Higher energy prices contributed to a 0.6% MoM jump in headline CPI to 0.9% in March, in line with expectations. In fact, the energy component’s 10.9% increase was the second-highest on record. The core index, on the other hand, rose by just 0.2% and was the coolest print since last May. PPI releases also came in well under consensus. As with CPI, headline MoM PCE jumped (0.4% to 0.7%), but the core figure’s 0.2% MoM pace was 0.1% under forecasts. 2-year inflation expectations fell over the month, but breakevens 5-years and longer climbed. The 10-year break led the way, finishing up 18 bps at 2.49%.
Federal Reserve
In what was likely the final meeting under Chairman Powell’s leadership, the FOMC left their policy rate unchanged. Four voters dissented from the decision, the most since October 1992. One dissent was dovish, and the other three hawkish dissents only opposed the inclusion of an easing bias in the FOMC Statement language. Once he is confirmed, incoming Chairman Warsh will preside over a Committee that is increasingly divided by the stagflationary effects of the energy price shock. Powell announced that he will remain on as a Governor after his term as Chairman ends on May 15, bucking 80 years of precedent in order to defend the Fed’s independence against the series of unprecedented legal attacks by the Trump administration.
Sources: Bloomberg Index Services Ltd., Bloomberg.
This overview is for informational purposes only. The information has been obtained from sources considered to be reliable, but the accuracy and completeness are not guaranteed. There is no assurance that any economic trends mentioned will continue or that any forecasts will occur. Economic data are as of the dates noted.
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