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- Daily Scoop 22-12-14
Daily Scoop 22-12-14
👋 Your Wednesday Scoops - Moderna's cancer breakthrough & Apple stops silencing
Today's Scoop:Stumble
Big Picture
Interest rates are going up on savings accounts and short-term debt.
Policymakers are still worried about inflation.
Mortgage rates have been coming down.
The Market:
⬇️
-0.6%
S&P 500: 3,995.32
1Mo:
+2%
| 1Yr:
-13%
| 5Yr:
+50%
The market wobbled lower today after the Federal Reserve's [🤓] policy announcement.
The Fed hiked baseline interest rates by 0.5%
, as most expected, but didn't hint at any lightening of economic restrictions next year. These higher rates should make
savings accounts pay more, and shorter-term debt like credit cards and auto loans cost more.
After yesterday's inflation report showing continued signs of slowing prices,
investors hoped the Fed would start easing back
on its steps to restrain the economy. This interest rate increase was less than the big hikes of previous meetings, but the Fed still said it would continue raising rates through next year.
Based on the market's reaction, investors think the Fed is just talking tough.
Long-term interest rates, driven more by investors, have started to come down from their peaks. The Mortgage Bankers Association said the average 30-year mortgage is now 6.42%, well down from +7% earlier in the year.
Mortgage applications for home purchases were up
4% last week.
Company Scoops ❤🌎💰
(Click to dig in & vote your reaction, see how others feel)
Apple
-
Moderna
-
Spotify
-
Lyft
-
Delta
(These links only work for 24 hours while the story is live)
🤓 Inside Scoop...
The
Federal Reserve
, aka the
Central Bank
, aka
The Fed,
is in charge of our whole money system. When the economy is struggling, the Fed lowers baseline interest rates to make it cheaper for consumers and businesses to borrow and spend. The Fed also pumps more money into the system by buying bonds with new dollars that it essentially speaks into existence. The additional cash keeps the pipes flowing as the borrowing and spending heat up, stimulating economic activity.
Once the economy's strong enough to stand on its own, the Fed starts to raise interest rates and pull back some of that money to ensure the economy doesn't overheat.
Inflation
is the Fed's heat gauge, and the gauge has been reading hot.
So everyone's watching whether the Fed can dial up the economic restrictions quickly enough to slow inflation and cool the economy but not so quickly that it completely freezes growth.
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