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  • Frank Tian

🇺🇸 Macro: Another Large Rate Hike

As expected, the Fed hiked the rate by another 75 bps today.

The cumulative rate increase this year is 375 bps - the fastest in history.

With persistently high inflation, the Fed has little choice other than continuing the rate hike.

🟥 Sep 12M inflation 8.2% - it stays above 8% for 7 months, even though down from the Jun peak of 9.1%.

Wouldn’t the high rate cause a recession down the road?

Well, that is less of a concern if consumers still have jobs hence income. GDP is only one metric of overall economic activity.

As banks’ Q3 earning reports show, consumers continued to shop with excess savings and abundant job openings.

🟩 Number of job vacancies up in Sep: 10.7 million

🟩 Sep unemployment rate down to 3.5% - same level in Feb 2020.

Looking forward, the inflation and interest rate are likely to stay higher and longer than what we like to see.

🟧 Oct consumer confidence (U of Michigan) up 2.2 points M/M to 59.9, though down 11.8 points Y/Y.

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