Job openings and factory orders came in lower than expected on Tuesday, continuing to show signs of softening economic demand that should work in the Federal Reserve’s favor in fighting inflation.
Prices in the money market now suggest increased levels of risk being priced into short-term lending and the tightening of overall financial conditions that was missing until the collapse of Silicon Valley Bank and Credit Suisse.
In the past week alone, the Federal Reserve's loans outstanding to the financial system have ballooned to about $318 billion, up from $15 billion a week ago.
The Fed’s key gauge of inflation—the personal consumption expenditures deflator—rose by 0.6% on the month for both the top-line and the core numbers, bringing the year-over-year inflation to 5.4% and 4.7% for the two series, respectively.
Policy brinksmanship over lifting the debt ceiling and the threat of default it brings is increasing the cost of doing business and carries far more risk than is commonly acknowledged.
Despite the lift in financial institutions" net interest margins from unprecedented rate hikes, the headwinds facing the industry through declining macroeconomic conditions are creating unique downside risks for the nation’s banking system.
The central bank hiked its policy rate by 25 basis points to a range between 4.5% and 4.75%, its eighth straight increase, though lower than the recent hikes.
The index showed that labor cost growth fell to 1.0% on a quarterly basis, and to 5.1% on a year-ago basis for all workers, according to the Bureau of Labor Statistics’ Employment Cost Index released on Tuesday.