Weekly Market & Economic News Recap (Week of July 24, 2023)

• Officials remain concerned about whether wages and price growth can slow enough without an economic downturn (Wall Street Journal, July 24, 2023, https://www.wsj.com/articles/why-the-fed-isnt-ready-to-declare-victory-on-inflation-e882b4d9?mod=economy_more_pos8)

• Home prices fell year-over-year in May. Chicago had the fastest annual home-price growth in the country, while the weakest market was Seattle. (Wall Street Journal, July 25, 2023, https://www.wsj.com/articles/home-prices-fell-year-over-year-in-may-b5c02109?mod=economy_more_pos6)

• Federal Reserve raises interest rates to 22-year high. Officials have slowed the pace of increases this year but aren’t sure they have fully tackled inflation. (Wall Street Journal, July 26, 2023, https://www.wsj.com/articles/home-prices-fell-year-over-year-in-may-b5c02109?mod=economy_more_pos6)

• Steady growth, moderating inflation improve odds of extended expansion. If Fed achieves a soft landing, history suggests economy could keep growing four or five more years. (Wall Street Journal, July 27, 2023, https://www.wsj.com/articles/home-prices-fell-year-over-year-in-may-b5c02109?mod=economy_more_pos6)

• U.S. economic growth accelerates, defying slowdown expectations. Economy grew 2.4% last quarter, suggesting the U.S. is steering clear of recession. (Wall Street Journal, July 27, 2023, https://www.wsj.com/articles/us-gdp-report-economic-growth-92482437?mod=economy_more_pos1)

• Some see potential global ramifications if a change in monetary policy at Bank of Japan leads Japanese investors to stop buying U.S. Treasury. (Wall Street Journal, July 28, 2023, https://www.wsj.com/articles/how-the-bank-of-japans-shift-could-play-out-in-u-s-markets-b5d7acf5?mod=economy_lead_pos2)

• Dow, S&P 500 notch third straight weekly gains. The S&P 500 is now up 19% in 2023, after falling 19% in 2022. (Wall Street Journal, July 28, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-news-07-28-2023-b422bfb6?mod=markets_lead_pos2)

• Core Personal Consumption Expenditure price index rose 4.1% from year ago, down from 4.6%. Gain in inflation-adjusted spending led by strong truck sales. (Bloomberg, July 28, 2023, https://www.bloomberg.com/news/articles/2023-07-28/us-inflation-cooled-while-consumer-spending-picked-up-in-june?srnd=economics-v2)

• Fed, FDIC Tell Banks to Step Up Contingency Funding Plans. Banks urged to include Fed discount window in contingency plan. US regulators also highlight liquidity risk management. (Bloomberg, July 28, 2023, https://www.bloomberg.com/news/articles/2023-07-28/banks-told-to-step-up-contingency-funding-plans-by-us-regulators?srnd=null)

• Inflation and wage growth ease as fed considers next move. Officials are looking for further slowing of wage growth and price increases to aid inflation fight. (Wall Street Journal, July 28, 2023, https://www.wsj.com/articles/wages-and-inflation-ease-as-fed-considers-next-move-a6abd49b?mod=economy_lead_pos1)

• Wall Street braces for the great loan tightening. Upcoming Fed survey expected to show tighter lending standards. (Bloomberg, July 29, 2023, https://www.bloomberg.com/news/articles/2023-07-29/wall-street-braces-for-the-great-loan-tightening-credit-weekly?srnd=markets-vp)