Results for: Federal Reserve

Mortgage rates have been rising steadily, with the average 30-year, fixed-rate mortgage reaching 7.17% for the week ending April 25th. Home buyers and sellers may not see any relief soon, as experts anticipate the Federal Reserve will hold rates steady in their meeting this week and only begin to trim borrowing costs in the second half of the year. However, volatility in rates is causing uncertainty in the housing market, as buyers may find they cannot afford the same property from one week to the next. Despite the higher rates, some buyers are adjusting and continuing to purchase homes, while the spring housing market is expected to pick up in late May and early June.

CNBC’s ‘Mad Money’ host Jim Cramer highlights the significant events that will influence market movements in the coming week. These events include the highly anticipated Consumer Price Index (CPI) data, the Federal Open Market Committee (FOMC) meeting, and several major earnings reports from prominent companies.

JP Morgan CEO Jamie Dimon has expressed concern about the possibility of stagflation in the U.S. economy, citing persistent inflation and the Federal Reserve’s efforts to tame consumer prices. While Dimon remains hopeful for a soft landing, he believes stagflation is among the possible outcomes. The Fed’s aggressive interest rate hikes have yet to bring inflation down to its target rate, raising concerns about prolonged inflation even as economic growth slows.

The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditure (PCE) price index, has risen more than expected in March, indicating persisting inflationary pressures and pushing back expectations of a near-term rate cut by the Fed.

The Federal Reserve’s recently released money supply data reveals a significant decline in M2 since its peak in April 2022. This decline, coupled with a recovering economy and higher interest rates, has absorbed the excess growth in M2. The resulting decrease in inflation is expected to continue as money demand normalizes. The charts presented in this article provide a visual representation of the historical growth of M2, currency in circulation, and money demand.

The US economy grew at a slower pace in the first quarter of 2023, while inflation accelerated, according to estimates by the Commerce Department. Consumer spending remained strong, driven by a resilient labor market and pent-up demand. The economy is expected to continue growing above the Fed’s non-inflationary rate, but some economists caution that sentiment surveys indicate a potential slowdown later in the year. The Fed is expected to delay cutting interest rates until September despite the slowdown in economic growth.

The United States is facing a severe debt crisis, with a projected debt of $34 trillion by year-end. This unsustainable debt burden is draining the economy, with the government spending billions on interest payments alone. The Federal Reserve’s interest rate hikes are exacerbating the situation, raising borrowing costs and fueling inflation. Experts warn that unless spending is cut or taxes are raised, the country could face a financial crisis.

The upcoming advance reading of US Q1 GDP growth holds significance for the Federal Reserve’s decision-making on interest rates and for the Bank of Japan’s potential intervention in the USD/JPY market. Stronger-than-expected growth may delay rate cuts, while weaker growth could suggest the need for earlier easing. The market consensus estimate for annualized GDP growth is 2.5%, with expectations ranging from 1.0% to 3.1%. Goldman Sachs forecasts growth at 3.1%. Data that falls outside of these expectations can have a significant impact on markets.

Despite recent economic challenges, the Federal Reserve is unlikely to cut interest rates anytime soon, according to experts. The Fed’s hawkish stance is aimed at combating persistently high inflation, which has remained above the target level of 2%. While higher interest rates can slow economic growth, they have historically been associated with periods of growth. However, some economists argue that the Fed’s rate hikes may have a limited impact on the broader economy and that government spending is playing a significant role in supporting growth. Nevertheless, higher interest rates are starting to take a toll on consumers, with credit card delinquency rates rising. Experts predict that the Fed may eventually have to concede and lower rates to avoid a sharp economic downturn.

U.S. stocks ended Wednesday’s session with mixed results, with the S&P 500 edging up marginally, the Dow Jones Industrial Average slipping slightly, and the Nasdaq composite gaining a fraction. Tesla surged over 12% after announcing accelerated production plans for affordable vehicles, offsetting a 55% profit decline in its latest quarterly report. Meanwhile, bond yields rose, putting pressure on stocks. Other notable market moves included declines in Norfolk Southern, Boeing, and Teledyne Technologies, while Hasbro, Texas Instruments, and Boston Scientific posted gains. International markets exhibited mixed performances, with Japan’s Nikkei 225 jumping 2.4% as the yen weakened against the dollar.