Fed members’ speeches drove market interest rates higher last week.

Investors reacted to several speeches delivered last week by Fed members. The speeches included one from Chairman Powell where he was more hawkish about the future course of monetary policy. The possibility of a 50 basis point move up at the May FOMC meeting jumped in the last two days of last week. As a result, yields in the bond market jumped. The yield on the ten-year treasury moved up 16 basis points in two days. The yield on the two-year treasury moved up 13 basis points. The five-year treasury yield at 2.55% is now above the yield on the ten-year at 2.48%. The spread between the two-year and ten-year narrowed to less than 20 basis points for the full week. All of this movement took place with no significant release of new economic data.