The Federal Reserve has set a new target range by increasing its benchmark interest rate, marking its first hike since 2023. President Donald Trump has called for a substantial reduction in interest rates, advocating for lower borrowing costs given the country's robust credit status. However, officials have stated that ongoing inflation remains a significant factor driving this adjustment. More details🔗 Catch every update on the TOI App 👉 #FederalReserve# #FedRateHike# #USInterestRates# #InterestRates# #FederalReservePolicy# #Inflation# #USEconomy# #DonaldTrump#

US economy keeps up the momentum, ISM surveys show, but it's helter-skelter. Iran, gas prices & high inflation are the negatives. Yet the AI and stock market booms and low unemployment keep the 'good' times going. Strange times. via @MarketWatch

US housing inventory growth is accelerating: The monthly supply of new single-family homes rose +1.0 month in May, to 10.3 months, the highest since February 2009. This indicator measures how many months it would take to sell all homes currently on the market at the current pace of sales. The higher the reading, the weaker the demand relative to supply. By comparison, the long-term median for this metric is ~6.0 months. Since the 1970s, 6 of the 7 times this indicator surged to current levels, the US economy was already in a recession. This comes as elevated mortgage rates and record homeownership costs are keeping buyers on the sidelines, leaving builders with growing inventories that they are struggling to clear. The US housing market has rarely been this oversupplied.

The US economy powered through a surge in immigration from 2021 to 2024, with a boost to the wages of native workers without an adverse effect on their employment, a new study from the Brookings Institution finds.

“The US economy adding 162,000 jobs last month. That more than doubled the consensus forecast. This most jobs the economy has added in a month since March.” Actually it was more than 3x the consensus forecast, @CNN!

The US economy is less sensitive to interest rate increases by the Federal Reserve. To combat inflation and tame yields on long-dated debt, more aggressive hikes will be needed. That’s bad news for bonds.

The US economy has faced a barrage of shocks in recent weeks. But Paul Hollingsworth from BNP Paribas told Reuters that powerful 'structural growth tailwinds' — from rising defense spending to the massive AI investment underway — continue to underpin the outlook

🦔The US just sold 30-year bonds at 5.22%, the highest borrowing cost since 2001. The day before, 10-year notes went at the highest since 2007. It's a big deal because the national debt is near $40 trillion, larger than the whole US economy, and all of it has to be refinanced at these higher rates over time. The government now spends more on interest than on national defense. My Take When the government pays 5.22% to borrow for 30 years, that rate pulls up everything else you borrow against, your mortgage and your car loan included. The Fed can cut short-term rates all it wants, but if long-term yields keep climbing because lenders are nervous about the size of the debt, your borrowing costs stay high or go higher. That split between what the Fed does and what you pay is already showing up, and it's going to get worse as $40 trillion in debt rolls over at these prices. The interest bill alone is running $1.17 trillion this fiscal year, up 15%, and the government now spends more servicing old debt than it does on defense. That money does nothing for anyone, just the tab for past borrowing. And the government is leaning harder on short-term bills to get by, which means it has to come back to the market more often and take whatever rate exists that day. We know how cheap money funded the AI buildout, the private credit machine, and the carry trade, and this is the other end of that story. The cheap money era paid for all of it, and the bill is arriving. Hedgie🤗