- Federal Reserve officials enacted the third straight 0.75 percentage point increase in the federal-funds rate
- The Leading Economic Index declined 0.3% in August, the sixth straight monthly decline
- Existing home sales in August fell 20% compared to the prior year
Top Three Market Headlines
Fed Raises Rates Again: As foreshadowed by Federal Reserve Chairman Jerome Powell in his late-August speech in Jackson Hole, the central bank last Wednesday hiked its interest rate benchmark, the federal-funds rate, by 0.75 percentage points to a range between 3.00% and 3.25%. This was the third straight three-quarter point increase and the fifth rate hike of 2022 altogether. The central bank also signaled that additional increases are likely as it tries to cool down inflation. New projections showed that a majority of Federal Reserve officials expect that the fed-funds rate will rise by at least another 1.25 percentage points over the Fed's final two meetings of 2022.
Sixth Straight Decline for Leading Indicators: The Conference Board announced last week that its Leading Economic index (LEI), a composite of ten U.S. economic indicators intended to signal turning points in the economy, decreased by 0.3% in August. This marked the sixth consecutive month the LEI has declined. Between February and August of this year, the index has fallen 2.7%, a reversal from the 1.7% growth over the prior six months. According to the Conference Board, the key factor driving the index's decline in August was the Federal Reserve's aggressive monetary policy to tame inflation.
Existing Home Sales Fall Again: The National Association of Realtors reported last week that sales of existing homes dropped 0.4% in August from the prior month to a seasonally-adjusted annual rate (SAAR) of 4.80 million. This was the seventh straight month of decreasing sales. On a year-over-year basis, the level of sales was 20% lower, as market activity has cooled in reaction to rising mortgage rates. The median price of existing homes that were sold increased by 7.7% from August of last year, which was the lowest annual price gain recorded so far this year.