Lending and Interest Rate Watch - August 2023

As we gear up for Labor Day weekend, it's the perfect time to take a closer look at one of the most talked-about topics in the financial world - interest rates. In this overview, we'll delve into the intricate web of economic factors that influence interest rates, from the recent rate fluctuations to the Federal Reserve's policies and everything in between.

What Rates Did August 2023: Interest rates have been volatile throughout the month, but are closing out the month on a high note - or should I say "LOW". Still balancing in the low 7's the market is responding to more certainty and interest rates are improving. Will we see rates in the low 6's anytime soon? Most likely not, but the surge in rates we saw at the end of the month have bounced back.

Inflation: Inflation plays a pivotal role in determining interest rates. There's ongoing debate about what's causing this inflation, whether it's the Fed's stimulus measures, fiscal policies, supply and demand dynamics, or external factors like the Ukraine War. The big question is whether inflation is under control or still a concern, and we explore how the Fed gauges this through its annual targets.

Landings, Hard and Soft: The Federal Reserve is like the conductor of an economic orchestra, striving to prevent a "hard landing" recession. We discuss the challenges they face in predicting economic downturns and the critical importance of closely monitoring incoming economic data.

Home Prices: Home prices are a key indicator of economic health. Surprisingly, even in the face of high levels and mortgage costs, tight supply has kept prices from plummeting. We touch on price trends and data from various indices to shed light on this.

Jobs: Labor market data, including jobless claims, job openings, quits, and payroll counts, are a crucial part of the puzzle. These data points can significantly influence the Federal Reserve's decisions on rate hikes.

Market Expectations: What do traders and the market expect from the Fed's policies and interest rate movements? We explore how economic data and trends shape these expectations, highlighting the possibility of rate cuts in the future.

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In the complex world of interest rates and economics, the trends in economic data provide a relatively straightforward view. While predicting the future remains a formidable challenge, understanding the factors at play - from inflation to jobs and market expectations - can help us navigate the ever-changing economic landscape. As we enjoy our Labor Day weekend, we'll be keeping one eye on the economic horizon, as it holds the key to many financial decisions in the months ahead.

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