The Fed Continues Its Rate Hike And Declares No Recession

The Weekly Recap

The Fed raised rates another 25 bps Wednesday to its highest level in 22 years, the US economy grew at a 2.4% annual rate last quarter, remaining well clear of a recession despite higher rates, The US luxury home market is slowing, labor force participation rate for 25 to 54 y/o rose to the highest level since 2002. Threads hasn’t been the Twitter I mean X killer that everyone thought with user engagement having plummeted 70% since launch. The summer rental market has continued to cool in areas like the Hamptons and Martha’s Vineyard, although nightly hotel rates are through the roof. The IRS promised it won’t show up to your house anymore unannounced, Barbenheimer lived up to its financial hype and because we can’t have nice things for too long, Spotify is raising the price of the premium plan in the US.

The Fed Continues Its Rate Hike And Declares No Recession

After a much deserved and celebrated break in rate hikes after June’s Fed meeting, the Federal Reserve increased rates another 25 bps hitting a 22 year peak for rates. With low unemployment, a growing economy and slowing inflation, the Fed has upgraded their assessment of economic growth from modest to moderate and confirms that the Fed is no longer projecting a recession.

Jerome Powell is still aiming to get the inflation number down to 2% and believes that that number can be achieved in 2025, giving credence to the inside joke/motto amongst bankers over the past 6 months of “Survive ‘til ‘25”.

A good sign that we’re continuing on the right track is that the next Fed meeting is happening as it would be regularly scheduled in September, occurring every other month as it should instead of every month when not dealing with potential financial crises. Between now and then, the US will see two monthly reports on jobs and consumer prices in the interim which may give more ammo to not raise rates again in September, giving the US its longest break in rate increases in years.

Another great indicator is the sign that the US grew at an annualized rate of 2.4% in Q2 beating expectations with household spending topping estimates and business investments being robust. This unexpected GDP number shows that the economy still has a lot of steam in it and that consumers and businesses alike continue to be resilient in the face of high interest rates.

Market Performance

Here are how some other indexes and asset classes have performed as of this mornings opening bell.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past week as well as newly signed contracts in Manhattan.

Mortgage Rate Update

Mortgage rates inched up slightly after a significant decline last week. Higher interest rats continue to dampen activity in interest rate-sensitive sectors such as housing. However, overall US consumer confidence is unwavering, surging to a two-year high. Rising consumer confidence leads to greater spending, which could drive more consumers to the housing market.

News You Can Use

• Fed Approves Interest Rate Hike CNBC

• US Growth Accelerates to 2.4% Bloomberg

• Luxury Home Market Struggle in the US Wall Street Journal

• Sensing End of Fed Hikes, Some Investors Return to Dividend Stocks Reuters

• Buyers Are Getting Home Loans From Sellers Wall Street Journal

• Is the World Experiencing a Soft Landing Fox Business

• US Consumer Confidence Hits Two-Year High Reuters

• Stock Market Shrugs Off Recession Signals as Rally Builds Wall Street Journal

• Wall Street Is Bracing for a Fresh Deluge of Treasury Bills Bloomberg

• Americans in Their Prime Are Flooding Into the Job Market Wall Street Journal

• US Businnes Activity Growth Slows as Services Soften Reuters

• US IRS Ends Policy of Unannounced Revenue Officer Visits to Taxpayers Reuters

• Banks Are Going on a Diet Wall Street Journal

• The Bear Market Has Nearly Been Erased Bloomberg

• Goldman Sachs Expects ‘All Time High’ Oil Demand CNBC

• What AI Means for Growth, Incomes and Inflation Axios

• ChatGPT’s Accuracy is Dwindling Fortune

• Musk’s Plan for An ‘Everything App’ to Replace Twitter Axios

• Warren Buffet Lifts Fossil Fuel Bets Bloomberg

• The Market Isn’t Just the Magnificent Seven Anymore Axios

• Spotify Plans to Raise Price of Premium Plan in U.S. Wall Street Journal

The Deep Insight

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