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As it battles inflation that remains at four-decade highs, the Federal Reserve is expected to hike its key interest rate another 0.75% Wednesday. This interest rate, known as the federal funds rate, affects the cost of borrowing and the pace of investment throughout the economy. As a result, some experts believe the Fed must keep raising interest rates, even if it drives unemployment higher. The U.S. unemployment rate currently stands at 3.5%. "This forces the Fed to continue its aggressive approach on interest rates."

The Institute for Supply Management (ISM) said on Tuesday that its manufacturing PMI fell to 50.2 in October from 50.9 in September. China's Caixin/S&P Global manufacturing PMI stood at 49.2 in October, up from 48.1 in September. The private sector survey was in line with an official PMI released on Monday that showed China's factory activity unexpectedly fell in October. Japan's au Jibun Bank Japan Manufacturing PMI fell to 50.7 in October from September's 50.8 final, marking the weakest growth since January last year. India was an outlier with factory activity expanding at a stronger pace in October as demand remained solid.

☆ Here's why Goldman Sachs is warning about a stock market crash and recession.
▼ + stars: | 2022-10-27 | by ( Phil Rosen | ) www.businessinsider.com time to read: +6 min

Dust off your dictionaries because today's GDP release might reignite the recession debate that's proved as semantic as it is economic. There are a couple things on Goldman Sachs' radar at the moment, and neither are particularly upbeat. Morgan Stanley's top strategist said investors should look for the bear market to end in the first quarter of 2023. The housing market has a big disconnect that can't last and prices for new homes have a long way to fall. This 27-year-old real estate investor who owns nine properties in Alabama said you shouldn't sleep on the Birmingham market.

☆ Home prices in these 8 markets are falling the fastest as the US housing market slows down at the quickest pace ever
▼ + stars: | 2022-10-27 | by ( William Edwards | ) www.businessinsider.com time to read: +4 min

It's official: home prices in the US are in a downward trend on a national level. This is killing buyers' ability to afford higher prices. Housing affordability — when taking into account home prices, mortgage rates, and incomes — is now at one of its lowest levels in decades, according to data from the National Association of Realtors. Scott Buchta, the head of fixed income strategy at Brean Capital, also said in a memo on Wednesday that home price declines would continue, eventually falling on a year-over-year basis. Many see a so-called "Fed pivot" back to dovish policy as necessary for mortgage rates to fall.

☆ The housing market has a big disconnect that can't last, and prices for new homes have a long way to fall, analyst says
▼ + stars: | 2022-10-26 | by ( Brian Evans | ) www.businessinsider.com time to read: +2 min

A disconnect between sales of new homes and mortgage demand is not sustainable, according to Pantheon Macroeconomics. Chief economist Ian Shepherdson said its likely reflects buyers rushing to lock in deals before mortgage rates climb higher. Meanwhile, prices for new homes "have a long way to fall before the market reaches a sustainable equilibrium," he warned. In a research note, Shepherdson pointed out that August saw a sales jump and the last month's dip still leaves sales much higher than what mortgage demand implies. Meanwhile, the 30-year fixed mortgage rate surpassed 7%, hitting a 21-year high.

☆ Bank of England to hike by 75 bps on Nov. 3 but may go bigger
▼ + stars: | 2022-10-25 | by ( Jonathan Cable | ) www.reuters.com time to read: +4 min

Annual price rises were expected to peak at 10.4% this quarter, the poll showed, before gradually declining, but won't fall to target until at least 2025. The median forecast in the Oct. 18-25 poll showed the BoE would take Bank Rate up by 75 bps to 3.00% next week. But while that was a view held by 18 of 30 respondents, 10 expected 100 bps, one said 125 bps and one said 150. It was then expected to add another 75 bps in December and 50 bps next quarter before pausing, meaning rates would peak at 4.25% in the current cycle. Both the European Central Bank and the U.S. Federal Reserve are expected to deliver 75-bps increases at their next meetings.

☆ Mexican headline inflation slows in early October, core index still a concern
▼ + stars: | 2022-10-24 | by ( ) www.reuters.com time to read: +3 min

An employee prepares dough to make tortillas at a tortilla stall in Ozumba de Alzate, State of Mexico, Mexico, May 24, 2022. Headline annual inflation in Latin America's second-largest economy inched down to 8.53% from 8.64% in the second half of September, also undershooting the consensus forecast of a Reuters poll for a rate of 8.63%. Compared with the previous two-week period, Mexican consumer prices rose by 0.44% in early October, the data showed. The core price index, which strips out some volatile food and energy prices, climbed 0.42% in early October, slightly above market expectations for 0.35%. Annual core inflation was 8.39%, above forecasts for 8.31%.

☆ Fears of a severe recession deepen as European business activity slows on surging energy costs
▼ + stars: | 2022-10-24 | by ( Silvia Amaro | ) www.cnbc.com time to read: +1 min

Business sentiment in the euro area dropped once again ahead of an ECB meeting where President Christine Lagarde is expected to raise rates again. European business activity took another hit in the month of October, reporting the steepest output loss since April 2013 excluding pandemic lockdowns. Firms have been under pressure due to higher inflation, particularly coming from energy costs and wage pressures. Manufacturing activity led the losses, but services output also dropped for a third consecutive month. In terms of national breakdown, business activity in Germany came in at 44.1, versus 45.7 in the previous month.

☆ China's leadership more positive toward tech firms than a year ago, says economist
▼ + stars: | 2022-10-24 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailChina's leadership more positive toward tech firms than a year ago, says economistThe recent party conference in China indicated continuity on the strict regulation of tech companies, with reference to tackling monopolies. But the leadership's overall stance has become more positive amid the current sell-off, according to Duncan Wrigley, chief China economist at Pantheon Macroeconomics.

☆ A 20% crash in the housing market is possible as mortgage rates continue to surge higher
▼ + stars: | 2022-10-21 | by ( Matthew Fox | ) www.businessinsider.com time to read: +7 min

There's a flashing red warning sign hitting one of the biggest segments of the US economy: the housing market. This is all a recipe for disaster, and it could ultimately lead to a 20% decline in housing prices, according to Pantheon Macro's chief economist Ian Shepherdson. The housing market is in free fall with "no floor in sight." Pantheon Macroeconomics' chief economist Ian Shepherdson is sounding the alarm on the housing market, warning that home prices could fall as much as 20%. The price movement has some scratching their heads, given that demand for lumber is largely tied to the housing market, which can't get out of its own way due to soaring mortgage rates.

☆ The housing market will deteriorate more quickly as the impact of soaring mortgage rates hasn't been fully felt yet, Goldman Sachs says
▼ + stars: | 2022-10-21 | by ( Brian Evans | ) www.businessinsider.com time to read: +2 min

The housing market will continue to slide in the coming months, according to Goldman Sachs. Analysts said September existing homes sales data didn't fully capture the latest increase in mortgage rates. In a Thursday note, they said "we expect the deterioration in the housing market to reaccelerate in future prints." But since the start of August, mortgage rates have jumped by roughly 2 percentage points, meaning September home sales data likely didn't reflect the increase in borrowing costs. The housing market has been setting off more alarm bells lately.

☆ The housing market is in free fall with 'no floor in sight,' and prices could crash 20% in the next year, analyst says
▼ + stars: | 2022-10-20 | by ( Brian Evans | ) www.businessinsider.com time to read: +2 min

The housing market will continue to plummet as there's "no floor in sight," according to Pantheon Macroeconomics. Chief economist Ian Shepherdson wrote in a note Thursday that home prices could fall as much as 20%. His warning came after existing home sales dropped for an eighth consecutive month, the longest slump since 2007. "Eight straight declines in sales and no floor in sight," Pantheon chief economist Ian Shepherdson wrote in a note on Thursday. He added that the cumulative fall in sales from the peak in January is now 27%, "but this is not the floor."

☆ Analysis: Despite tax U-turn, UK's Hunt still faces tough budget choices
▼ + stars: | 2022-10-17 | by ( William Schomberg | ) www.reuters.com time to read: +5 min

LONDON, Oct 17 (Reuters) - The screeching about-turn on tax cuts by finance minister Jeremy Hunt on Monday will not spare Britain from painful spending cuts and new tax hikes to fix the country's public finances. Paul Johnson, director of the Institute for Fiscal Studies, a think-tank, said Monday's tax cuts U-turn was relatively simple compared with the balance Hunt must strike between more tax increases and spending cuts over the next two weeks. Hunt said the tax U-turns announced so far would raise about 32 billion pounds a year in extra revenues. That was 40 billion pounds above the level needed to cut debt as a share of the economy which currently is about 97%. "With tens of billions of spending cuts still to come, and a new energy support package needing to be devised, many of Jeremy Hunt's tough choices still lie ahead," Torsten Bell, chief executive of the Resolution Foundation, said.

"The ongoing squeeze on household finances continues to weigh on growth, and likely to have caused the UK economy to enter a technical recession from the third quarter of this year," Yael Selfin, chief economist at KPMG UK, said. Manufacturing fell by 1.6% from July and more maintenance than unusual in the North Sea hit the mining and quarrying sector which includes oil and gas. "Many other consumer-facing services struggled, with retail, hairdressers and hotels all faring relatively poorly," ONS Chief Economist Grant Fitzner said. GDP in September is likely to be weakened by a one-off public holiday to mark the funeral of Queen Elizabeth. The International Monetary Fund said on Tuesday it expected British GDP to grow in 2023 but only by 0.3%.

☆ UK house prices could plunge 15% because of soaring mortgage rates
▼ + stars: | 2022-09-28 | by ( Anna Cooban | ) edition.cnn.com time to read: +3 min

London CNN Business —House prices in the United Kingdom could plummet by as much as 15% if the country presses ahead with its tax-slashing economic gamble. Credit Suisse (AMJL) said on Tuesday that UK house prices could “easily” fall between 10% and 15% over the next 18 months if the Bank of England aggressively hikes interest rates to keep inflation in check. Some analysts now expect the Bank of England to raise interest rates to 6% next year, up from its current 2.25%, to prop up the ailing currency. Capital Economics, which likewise forecasts a drop in house prices of between 10% and 15%, warned the slump could be “devastating.”“The resulting drop in buying power makes a significant drop in house prices inevitable,” Andrew Wishart, senior economist at Capital Economics, said in a research note on Tuesday. “Mortgage arrears and default would rise just as house prices likely would be tumbling, placing huge strain on banks’ balance sheets,” Tombs said.

☆ Brazil's inflation extends downtrend in mid-September on lower fuel prices
▼ + stars: | 2022-09-27 | by ( Gabriel Araujo | ) www.reuters.com time to read: +3 min

Inflation in the 12 months to mid-September hit 7.96%, well below the 8.14% forecast by economists, likely backing the central bank's recent decision of pausing its aggressive rate hiking cycle. Adding to energy state tax cuts announced earlier this year, oil giant Petroleo Brasileiro SA reduced refinery gate gasoline prices twice since mid-August, leading to lower prices at the pump. The inflation drop in September, however, was not widespread as prices fell in only three of the nine groups of products and services surveyed, IBGE said - communication, food and beverages, and transportation. The latest inflation data comes as Brazil's central bank last week chose to keep interest rates unchanged at 13.75%, pausing an aggressive tightening after 12 consecutive increases aimed at curbing high inflation. William Jackson, chief emerging markets economist at Capital Economics, said the inflation figures confirmed that the monetary tightening cycle was over.

☆ UK lenders halt mortgage deals to customers after market chaos
▼ + stars: | 2022-09-27 | by ( Sophie Kiderlin | ) www.cnbc.com time to read: +3 min

Oli Scarff | Getty Images News | Getty ImagesLONDON - U.K. lenders Virgin Money, Halifax and Skipton Building Society pulled some of their mortgage deals to customers after the tumult in British bond markets. Virgin Money and Skipton Building Society temporarily paused mortgage offers for new customers, while Halifax — owned by the Lloyds Banking Group — is planning to halt any mortgage products with fees where lower interest rates are usually offered. Skipton Building Society said they had paused their products in order to "reprice following the market response over recent days." Markets have begun pricing in a base rate rise to as high as 6% for next year, from 2.25% currently, raising concerns among mortgage lenders and borrowers. "Households refinancing a two-year fixed rate mortgage in the first half of next year will see monthly repayments jump to about £1,490 early next year, from £863 when they took on the mortgage two years prior."

☆ The Truss tax plan cushions the wealthy while pushing borrowers toward a financial cliff
▼ + stars: | 2022-09-27 | by ( Allison Morrow | ) edition.cnn.com time to read: +7 min

That’s because the Bank of England is now widely expected to hike interest rates even further to tackle inflation that will be exacerbated by the government’s sweeping tax cuts. That means many as 1.8 million borrowers are now hurtling toward a financial cliff as they prepare to refinance next year, when the mortgage rate may well have doubled. The vast majority (nearly two-thirds) of the tax gains go to the wealthiest one-fifth of households, according to one think tank estimate. According to the US Treasury, tax cuts reduced federal revenues by about 9% in the first couple of years. However, Congress eventually decided the sweeping tax cuts were unsustainable and, with Reagan’s approval, raised taxes by a lot in 1982.

☆ Spring and summer 2023 will finally be a good time to buy a home
▼ + stars: | 2022-09-27 | by ( Alcynna Lloyd | ) www.businessinsider.com time to read: +3 min

Inflation and interest rate hikes have made it even more expensive to buy a home. In addition, a slowing economy overall could bring 30-year mortgage rates back down. As economic volatility further seeps into the US real estate market, housing activity is fading fast. That's because inflation and interest rate hikes have dampened affordability for many would-be shoppers, leading to a steady decline in buyer demand. This combination of cooling prices and declining mortgage rates could indicate the typically busy real estate seasons of spring and summer could ring in a more affordable housing market in 2023.

☆ UK mortgage borrowers are in for a nasty shock from soaring rates
▼ + stars: | 2022-09-27 | by ( Anna Cooban | ) edition.cnn.com time to read: +4 min

London CNN Business —Millions of mortgage borrowers in the United Kingdom are bracing themselves for huge hikes to their monthly payments as a consequence of the run on the pound. Markets had already been expecting the central bank to raise interest rates to 4.75% by next spring. There are 9 million outstanding residential mortgages in the United Kingdom, according to UK Finance, an association of banks and financial services firms. About 20% of those loans are tracker, or variable rate products, that typically become more expensive when the central bank hikes rates. Halifax, owned by Lloyds Bank (LLDTF), removed some of its mortgage products, while Virgin Money stopped taking mortgage applications from new customers until later this week.

The British pound plunged to a record low against the U.S. dollar Monday. The pound, historically one of the strongest currencies in the world, fell to as low as $1.04 before bouncing back to approximately $1.07. For most of the past few decades, the pound averaged a price of about $1.50 against the dollar. The decline in the British pound in itself won't have a direct impact on the U.S. economy, experts say. But as the value of the pound has dropped, the value of the U.S. dollar has reached all-time highs.

☆ The drop in the pound is sending UK rate expectations to 6% in 2023 - and that means a spike of 73% for some mortgage payments, economist says
▼ + stars: | 2022-09-26 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

Expectations are rising that the UK's benchmark rate will reach 6% in 2023 on the back of the pound's slide. That could mean monthly payments for some refinanced mortgages could jump by 73% to nearly £1,500 in the first half of next year, said Pantheon Macroeconomics's chief UK economist. In dollar terms Monday, monthly payments could rise to $1,593 from $923. A 2-year fixed rate mortgage is the shortest-term offered in the UK for a fixed home loan, according to product comparison website Money.co.uk. The UK's central bank has raised the benchmark interest rate to 2.25% in seven hikes since December to control inflation.

☆ Take no prisoners: In the Fed’s inflation fight, no one is spared
▼ + stars: | 2022-09-26 | by ( Christine Romans | ) edition.cnn.com time to read: +5 min

Global central banks are jacking up interest rates with no end in sight until high inflation is vanquished. The Federal Reserve is aggressively fighting inflation by lifting its benchmark interest rate five times so far this year. There isn’t.”Higher interest rates make life more expensive for anyone who borrows money. The higher rates ding home affordability but also might be holding back home sales. Higher interest rates make financing a car — when you can find one — even more expensive.

☆ US home prices could plunge 20% by next summer as a housing recession kicks in, a top economist says
▼ + stars: | 2022-09-23 | by ( Theron Mohamed | ) www.businessinsider.com time to read: +3 min

The US housing market is in a recession, Pantheon Macroeconomics' Ian Shepherdson said. Federal Reserve officials have indicated they want a correction in the housing market. "Housing, in short, is in recession, and everything connected to housing either is in recession now or soon will be," they added. "We've had a time of a red-hot housing market all over the country," Powell noted. "The deceleration in housing prices that we're seeing should help bring prices more in line with rents and other housing-market fundamentals.

☆ US stocks fall after steep sell-off as investors assess outlook for more aggressive rate hikes to come
▼ + stars: | 2022-09-22 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

The Federal Reserve's rate hike Wednesday was followed by rate hikes at other central banks. Other central banks including Switzerland and Norway followed suit with their own rate hikes as inflation burns hot throughout the global economy. The Bank of England raised its key rate by 50 basis points as inflation sits at 9.8%. US weekly jobless claims released Thursday rose slightly, by 5,000 to 213,000, but the labor market remains strong. Here's what else is happening today:"Bond King" Jeff Gundlach said the Fed's commitment to big rate hikes means a 75% chance of a US recession in 2023.

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