The Federal Reserve continues its fight against inflation, but there is a bullish sentiment in the markets; Business activity in the manufacturing sector is slowing, although Goldman analysts have raised their US GDP forecast for the second quarter to 2.2% (in the previous quarter) from 1.8% previously.
whats going on?
Did bankers decide to help push the S&P 500 over 4,500 points on their own? There may have been attempts at manipulation, but Tuesday’s rally was supported by strong homebuilding data A rebound in consumer confidence.
Where does faith come from?
From price increases and a slowdown in the flexible labor market. For example, according to the Economic Calendar, consumer inflation expectations for the next 12 months fell to 6%, the lowest level since December 2020.
Expectations for consumer inflation over the next 12 months fell to 6%.
And even though US jobless claims rose for the third week in a row, it’s still not a disaster. Finally, rising borrowing costs have not caused significant problems.
First, Most households refinanced their mortgages during the pandemic. Second, consumers have not borrowed much in the past two years.
According to a study Wall Street Journal, In the first quarter, home loan service payments were 9.6% of disposable personal income, the lowest level recorded since 1980.
Does this mean the economists are wrong once again and there will be no recession? Higher interest rates take time to fully affect the economy and cold growth and inflation.
Also, higher rates can reduce growth in obvious ways, such as forcing employers to cut vacancies or companies to abandon expansion plans.
Having said that, the situation in the world’s leading economy is not as rosy as it seems.
***Igor Kuchma He is an analyst at TradingView.
