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Feb 21, 2024
According to the minutes from January's Federal Open Market Committee meeting, policymakers believe the risk of cutting rates too soon remains greater than the risk of waiting too long. Inflationary data released since January's FOMC meeting has likely strengthened their resolve. Unanimously, the rate-setting FOMC decided to keep the target range of the fed funds rate at 5.25% to 5.5% in January. When they reconvene in a month, they are likely to do the same. Our February baseline places the first rate cut at May's meeting.
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Feb 16, 2024
The University of Michigan consumer sentiment index maintained its gains of the last two months as it inched higher in February, according to the preliminary report. The index came in at 79.6, little changed from January's 79 but still impressively up from November's 61.3. This took the index to its highest level since July 2021. Inflation expectations changed little. Median 12-month inflation expectations inched up from 2.9% to 3%. Five-year expectations held steady at 2.9%. The change in confidence from January was led by the expectations component, which rose 1.3 points. The present conditions component dropped 0.4 point.
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Feb 07, 2024
Mortgage activity ticked up slightly in the week ending February 2 after sharply declining the week before. The MBA's market composite index rose 3.7% on the previous week, when the index tumbled 7.2%. Purchase applications were a drag for the second week in a row, falling a modest 0.6%, but refinance applications picked up the slack, jumping 12.3%. The 30-year fixed mortgage rate has been relatively stable over the past month, inching up 2 basis points this week, while being just 1 bp below its month-ago level. At 6.8%, however, the rate is a full 62 bps higher than a year earlier, reflecting tighter financing conditions and therefore headwinds for the mortgage market in 2024.
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Jan 29, 2024
Global businesses are feeling somewhat better at the start of 2024. Respondents' broad assessment of current business conditions has turned positive, with close to one-fourth of respondents saying they are improving. Expectations regarding the economy's prospects by midyear have also edged into positive territory. But businesses remain cautious, saying sales are soft and financing conditions are tight. And they continue to shed office space. The survey results are consistent with a global economy that is skirting recession.
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Jan 26, 2024
Consumer finances remain strong, but they are being undermined by high inflation, high interest rates, and exhausted excess saving for some. Hence, bankruptcy filings are showing a deterioration in household finances. A fourth-quarter decline in filings had been seasonally normal, the fruit of preparation for holiday spending, and the streak of declines in place since 2008 remained intact. U.S. courts reported that non-business filings come in 19% above their year-ago level after rising 13.9% in the prior quarter. On a quarter-to-quarter basis, filings dipped 2.2%. Business filings rose in the quarter, up 11% from the third quarter. They were up 53.2% from a year earlier as high interest rates take a toll. This compares with a 37.7% increase on a year-ago basis in the prior quarter.
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