Weekly Briefs: More Bank Consolidations, 2 More Rate Hikes and National Debt Hits A New Record High

Numbers:

• The national debt surpassed $32 trillion. This is more than the economies (GDP) of the UK, Germany, China and Japan combined. U.S. debt increased by $637 billion since the debt ceiling deal was reached 3 weeks ago. The interest expense alone on this debt is $1.3 billion per day.

  

• According to Freddie Mac, long term mortgage rates continued to fall this week. 30-year fixed-rate mortgages averaged 6.67% as of June 22, down from last week when they averaged 6.69%:

• As the result of declining mortgage rates and seasonality, existing home sales increased +0.2% month over month to 4.30M vs. 4.25M consensus and 4.29M in April. The median existing-home price was $396.1K in May.

• Initial jobless claims for the week ended June 17 were unchanged at 264K vs 260K consensus. Employment numbers remain strong, providing support for the Fed’s interest rate hikes later this year.

• Many U.S. banks are now paying over 5% on high yield savings accounts and CD’s.

• Bitcoin broke through $31k on June 23rd, the highest level since April 2022:

News:

• Treasury Secretary Yellen said that more bank mergers are likely this year. The Regional Bank Index, $KRE, is down 11% during the last 2 weeks.

• Globally, a number of central banks raised interest rates more than previously expected: UK raised rates by 50 bps (13th rate hike); Norway raised rates by 50 bps (11th rate hike); Switzerland raised rates by 25 bps; and Turkey, fighting an unprecedented drop in the value of its currency, increased rates by 650 bps (this is not a typo) to 15.00%.

• With regards to the projected two interest rate increases later this year, Fed Chair Powell says it’s “hard to know what rate level will achieve the Fed’s goals.” With so much uncertainty, it’s safe to assume that the Federal Reserve would rather do short term damage than risk inflation spiking. Odds of a 25 basis point rate hike in July just are 80%. There’s a 15% chance of 2 more rate hikes by September 2023:

  

Enjoy your weekend!

- Lena