US mortgage rates hit 5% this week for the first time in more than a decade, continuing a rapid ascent since the start of 2022. According to The Wall Street Journal, interest on the average 30-year fixed-rate mortgage climbed from 4.72% a week ago to its highest level since early 2011. Now, bankers and economists predict that the pricier mortgages may finally be cooling a hot housing market, with two of the nation’s largest home lenders reporting this week that mortgage originations fell 27% and 37%, respectively, from a year ago. [WSJ; April 14, 2022].
The CEO of one of the nation’s largest banks warns of “powerful forces” threatening to drive the US economy into a recession later this year, as reported by CNBC. Although a relatively strong US economy is predicted for the next two quarters, “storm clouds” appear to be brewing in the distance—namely, rising interest rates, the reversal of Fed bond-buying policies, high inflation, the ongoing war in Ukraine, and COVID’s potential resurgence and its effect on supply. [CNBC; April 13, 2022].
US inflation surged to a new four-decade high of 8.5% in March from the same month a year ago. According to The New York Times, the consumer-price index—which measures how much US consumers pay for goods and services—rose last month at its fastest 12-month pace since December 1981, driven by a surge in grocery and energy costs, supply shortages and strong consumer demand. While some economists and investors report signs that inflation has hit its peak, many remain weary in the face of growing supply-chain constraints caused by Russia’s continued invasion of Ukraine and the rise of COVID in China. [The New York Times; April 12, 2022].
State-owned Russian Railways JSC has been ruled in default by the Credit Derivatives Determinations Committee after missing a bond interest payment, the first such decision since the implementation of sanctions in response to Russia’s invasion of Ukraine. According to The Wall Street Journal, new sanctions against Russia were largely to blame for the missed payment, as the US included Russian Railways on a February list of the 13 most critical Russian enterprises for sanctions that prevents the state-owned company from raising money in the US market. [WSJ; April 11, 2022].