Daily Digest

Debt & Equity Finance

Fed still on track for June rate cut, and 2 other takeaways from Powell’s press conference

March 25, 2024

The Fed kept its policy rate steady in a range of 5.25%-5.5% and made no major changes to its policy statement. The committee also maintained its forecast for three rate cuts this year.

Beneath the surface, though, several important messages emerged from the press conference. Here are the three main takeaways economists had regarding Powell’s remarks:

Leading index for U.S. economy posts first increase in two years

The leading indicators for the economy rose in February for the first time in two years, which is another sign that the U.S. is likely to keep growing and avoid a recession.

The conference board said that the index of leading economic indicators had increased by 0.1% last month.  It’s the first increase since February 2022.

The leading index is a gauge designed to show whether the economy is getting better or worse.  Economists polled by the Wall Street Journal had forecast a 0.1% decline in February.

The U.S. economy lapsed into recession the other times the index was negative for longer — 1973-75 and 2007-09.

Source: MarketWatch

Builder-confidence index reaches highest level since July 2023

Builder confidence rose for the fourth month in March as buyer demand remained strong.

Builders indicated that a low level of resale home listings and expectations of a drop in mortgage rates in the second half of this year are expected to boost demand for newly built homes further.

The expectations of a jump in demand in the coming months pushed the National Association of Home Builders (NAHB) monthly confidence index up 3 points to 51 in March.

The index is at its highest level since July 2023. That was also the last time the index broke the breakeven point of 50. 

Source: MarketWatch

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