Wilmington Trust’s Post

Annual inflation is the lowest since early 2021. Next week the Fed is expected to cut interest rates by 25 basis points- already embedded into the equity markets. The million dollar question is should have we have started the rate cuts in July? If we get a 50 basis point cut next week- clearly the Federal Reserve is essentially admitting they should have started in July. Not sure how the equity markets will react to a 50 basis point cut... As someone that trades daily in the equity market, next week will be interesting. The good news for the consumer is food prices and gasoline have stabilized. Housing market is still a bit stubborn- but as interest rates come down, people will be more willing to give up their <3% interest rates they have today and start house hunting again. Interest rate reductions coupled with the political enviroment will keep the markets volatile for the balance of the year. Cash is not a bad thing today!

Is inflation over? Actually, no. And it may be getting worse. Let’s begin the analysis with the latest data. Last Friday, the Bureau of Labor Statistics reported that inflation (as measured by the Consumer Price Index, CPI, on a year-over-year basis) was 3.4%. That’s practically the Federal Reserve’s worst nightmare. Here’s why: The Fed stopped raising interest rates last July. At that time, they set the target policy rate for fed funds at 5.50%. Despite some internal debate, there have been no further rate hikes in the last three meetings. In the December 2023 meeting, Fed Chair Jay Powell more or less confirmed that the Fed had reached what they call the “terminal rate.” The terminal rate is defined as a rate that’s high enough to bring inflation down on its own without further rate hikes. This belief put the Fed on pause and immediately started speculation about the “pivot” to rate cuts in the near future. Continue reading this article here. https://lnkd.in/eza-FJ-q

The Key Inflation Reading was at a 3-Year Low, Keeping the Federal Reserve On Track For a September Rate Cut 📉 A key inflation indicator recorded its lowest reading in three years, a result that could make the case easier for the Federal Reserve, which is expected to cut interest rates at its highly anticipated September meeting. Check out the full article here: https://lnkd.in/dcDNY-gs #interestrates #marketupdates #atlantarealtor #georgiarealtor #northgeorgiarealtor

Federal Reserve Governor Christopher Waller expressed support for a 50 basis point rate cut, citing rapidly falling inflation, which he says is softening faster than expected. Recent data shows core inflation running below 1.8% over the past four months, allowing the Fed room to ease rates. The Fed’s key rate now sits between 4.75% and 5%, with officials signaling potential further cuts this year. Waller emphasized the need to remain flexible based on incoming data and committed to maintaining the Fed’s 2% inflation target. The next inflation report is due next week. #FederalReserve #InterestRates #Inflation

Prices rose 3.3 percent in the year ending in May, as inflation still hasn’t returned to normal despite a long battle to wrestle it down. Fresh data released from the Bureau of Labor Statistics on Wednesday showed slight improvement from April, when prices rose at an annual rate of 3.4 percent. Prices were flat compared to April. The Federal Reserve has been putting the economy under pressure through higher interest rates since March 2022, trying to control prices that grew at the fastest pace in four decades. And the latest snapshot will get a close study by central bankers as they wrap up their two-day policy meeting later Wednesday. By the afternoon, they’re all but guaranteed to leave interest rates unchanged, holding them between 5.25 and 5.5 percent — where they’ve sat since July, at the highest level since 2001. That lack of action is widely expected. What Wall Street, Washington and business and households around the country will watch eagerly is where Fed policymakers think the economy is headed. Officials are set to release a fresh set of economic projections at 2 p.m. Eastern, laying out their expectations for inflation, the unemployment rate, overall growth and interest rates. When the year started, the central bank was looking at three rate cuts in 2024. But because inflation came in hotter than expected from January to March, analysts now bet officials will pencil in only one or two cuts this year.

US inflation rose unexpectedly to 3.2 per cent, posing a challenge for the Federal Reserve in their efforts to combat rising prices 🆙. Economists projected a steady rate of 3.1 per cent based on a Bloomberg survey 📊. The increase, driven primarily by services like motor insurance and health, suggests the Fed may need to hold off ⛔ on lowering interest rates from their current 23-year peak 📈. Again, and as mentioned a few months ago, interest rates are often only reduced ↘️ once a recession is in sight/has started. The reason and the name it's given is always only known in the aftermath. What do we know from history? 📚 "The issue with rising bond yields is that something always breaks ❌, but it’s hard to know what and when" 🔮. 10Y minus 2Y US treasury bond yield spread has now been negative 📉 for almost 2 years. Historically this has called for caution ahead. #Fed #UsInflation

When the February inflation data gets released later this morning, the expectation among Wall Street analysts is that it will be about the same as January’s. If that is the case, then even in Wall Street narratives inflation is not cooling off but arguably heating up. What no one appears to be expecting is that inflation will move closer to the Fed’s 2% holy grail rate. Will the BLS surprise with a low inflation print? Or will it shock with an even higher than expected inflation print? https://lnkd.in/gt7bUQ64 #CPI #BLS #inflation #economy #prices

"The Federal Reserve's preferred measure of inflation fell last month in another sign that price pressures easing in the face of the central bank's interest rate hikes. "Friday's report from the Commerce Department showed that U.S. consumer prices slid 0.1% last month from October and rose 2.6% from November 2022. The month-over-month drop was the largest since April 2020 when the economy was reeling from the COVID-19 pandemic. "Excluding volatile food and energy prices, so-called core inflation last month rose 0.1% from October and 3.2% from a year earlier. "All the numbers show somewhat more progress against inflation than economists had expected. Inflation is steadily moving down to the Fed's year-over-year target of 2% and appears to be setting the stage for Fed rate cuts in 2024." #useconomy

The Federal Reserve has kept its key interest rate unchanged and revised its forecast from three rate cuts to just one for this year, following an early 2024 inflation rise. Inflation is currently around 3% to 3.5%, and the Fed won't reduce rates until it's confident inflation is moving towards the 2% target. Recent data showed a gradual moderation in inflation, with core inflation rising by 0.2% in May. The Fed now projects one rate cut by year-end, lowering the federal funds rate to 5%-5.25%, with more cuts expected in 2025 and 2026. As more supply enters the market, we can expect cap rates to continue rising. Therefore, it is essential to price our offerings appropriately to ensure successful sales. #rates #cre #netlease See below for additional details:

Inflation and interest rates remain at the top of many people's minds. Check out some thoughts from the CIO on the current situation and outlook for the future.