- The Federal Reserve raised the federal-funds rate target range to 4.75% — 5.00%
- Existing home sales increased almost 15% in February
- U.S. money-market fund assets exceed $5 trillion
Please join us for our April 2023 Gallagher Financial Markets Update webinar on Thursday, April 13th at 10:00 a.m. ET.
Top Three Market Headlines
Fed Settles on a Measured Rate Hike: The Federal Reserve last week raised the target for its interest rate benchmark, the federal-funds rate, by 0.25%. This was the ninth increase over the past year and put the target rate range at 4.75% to 5.00%. In settling on a quarter-point increase, which followed an identical move in early February, the central bank attempted to strike a balance between its on-going inflation fight and recent stress in the banking industry. Updated projections from Fed officials showed an expectation of one more future rate hike, though post-meeting statements by Fed Chairman Jerome Powell indicated that the banking industry turmoil could lessen the need for additional moves by the Fed.
Home Sales Break Slump: The National Association of Realtors reported last week that sales of existing homes in February rose to a seasonally-adjusted annualized rate (SAAR) of 4.58 million, up nearly 15% from the prior month. This broke a streak of 12 straight months of declining home sales. Aided by easing mortgage rates and improved affordability, buyers were more enticed by the market than they had been in prior months. Notwithstanding the monthly increase, the rate of sales was still down 23% on a year-over-year basis. Further, the report also revealed that this was the first month since February of 2012 that median home prices declined compared to the prior year.
Investors Rush to Money Market Funds: The Investment Company Institute reported last week that $117 billion cascaded into U.S. money-market funds in the week ended March 22, following an increase of $121 billion the prior week. These marked the largest weekly inflows since April 2020 and pushed total assets to $5.1 trillion, the highest on record in data that extends to 2007. Money-market funds have enjoyed a windfall over the past year as investors are lured by higher yields; presently, for example, money-market funds' annualized yields average more than 4.0%. In addition, the latest influx has come as some bank depositors seek alternative places to park cash amid recent developments in the banking industry.