Weekly Market Insights

September 23, 2022 Volume 9 Issue 38

Following another aggressive rate hike by the Federal Reserve, equity markets closed another trading week sharply lower, as investors worry that the Fed’s aggressive stance on monetary policy will ultimately push the US economy into a recession. 

Weekly Highlights:

  • As expected, the FOMC voted unanimously to raise the federal funds rate by 0.75% to a target range of 3.00% to 3.25%, the highest level since Q1 2008. Additionally, the FOMC’s summary of economic projections called for a median fed funds rate of 4.4% by year end and 4.6% at the end of 2023, before ultimately beginning to reduce rates starting in 2024, as the Fed accelerates its efforts to reduce inflation. 
  • The NAHB Housing Market Index fell three points to 46 in September, its ninth consecutive decline, and slightly below expectations. All index components were lower, but the decline was again led by a sharp drop in current sales conditions as high construction costs and rising mortgage rates continue to hamper affordability. 
  • Housing starts rebounded 12.2% in August to an annual rate of 1.58 million units, fully reversing July’s sharp decline of 10.9% and well above expectations. The increase was led by a 28.6% jump in multifamily starts to an annual rate of 621,000 units, while single-family starts rose a smaller 3.4% to an annual rate of 935,000 units. On a y/y basis, housing starts fell by 0.1%.
  • In contrast, issuance of building permits dropped 10.0% to an annual rate of 1.52 million units, the lowest level since June 2022 and well below expectations. The decrease was led by an 18.5% drop in multifamily permits, while single-family permits fell 3.5%. On a y/y basis, issuance of building permits sank 14.4%. 
  • The Conference Board’s Leading Economic Index (LEI) fell 0.3% in August, its sixth consecutive decline, and slightly below expectations. The LEI has fallen 2.7% over the past six months, a reversal from its growth of 1.7% in the previous six months and signaling a contraction in economic activity is likely. 
  • Initial claims for unemployment insurance increased by 5,000 to 213,000 last week, its first increase in five weeks, though slightly below expectations. Continuing claims edged down to 1.38 million, however, remaining near a 50-year low as labor demand remains strong even in a weakening US economy. 

The Week Ahead:

  • Economic releases will include current readings on consumer spending and personal income, consumer confidence, PCE inflation data, and the final reading of Q2 GDP. 

Have a great weekend!

The data and commentary provided herein is for informational purposes only. No warranty is made with respect to any information provided. It is offered with the understanding that Hilltop Holdings Inc., PlainsCapital Corporation, Hilltop Securities and PlainsCapital Bank (collectively “PCB”) are not, hereby, rendering financial and/or investment advice, and use of the same does not create any relationship with PCB. This is neither an offer to sell nor a solicitation of an offer to buy any securities that may be described or referred to herein. PCB does not provide tax or legal advice. Please consult your own tax or legal advisor regarding your specific situation.  Whether any of the information contained herein applies to a specific situation depends on the facts of that particular situation. Investment and estate planning and management decisions may have significant financial consequences and should be made only after consulting with professionals qualified to offer legal, accounting and taxation advice. Neither this document nor any portion of its content’s supplements, amends or modifies any account agreement with PCB. Unless otherwise noted:

*All economic release data referenced from public sources believed to be accurate.  *The source of data for all charts/graphs included in this presentation is Bloomberg LP.  *Figures quoted represent monthly changes (m/m) and are seasonally adjusted.

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