The daily business briefing: August 25, 2023
2 Federal Reserve leaders say rate hikes are nearly over, mortgage rates surge to highest level since 2001, and more
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1. 2 Fed leaders say rate hikes nearly over
Two Federal Reserve officials indicated Thursday that the central bank was close to the end of its aggressive interest rate hikes to slow the economy and bring down inflation. "We may need additional increments, and we may be very near a place where we can hold for a substantial amount of time," Boston Fed President Susan Collins told Yahoo Finance before the Kansas City Fed's annual economic policy symposium in Jackson Hole, Wyoming. "We may be near, but we may need to increase a little bit further." She said multiple Fed leaders expect one more rate hike. Philadelphia Fed President Patrick Harker said the Fed had "probably done enough" and could now "let the restrictive stance work for a while."
2. Mortgage rates surge to 22-year high
U.S. mortgage rates rose to their highest level since 2001 this week, according to data released Thursday by Freddie Mac. The 30-year fixed-rate mortgage averaged 7.23%, up from 7.09% last week. The rate on the same loan was 5.55% a year ago, when the Federal Reserve was earlier in its aggressive campaign to increase borrowing costs to slow the economy and bring down inflation. The economy has stayed stronger than anticipated even as inflation eases, fueling expectations that the Fed will keep rates high for now, said Sam Khater, Freddie Mac's chief economist. The higher rates have dragged down home sales, as owners with low mortgage rates resist putting their properties on the market.
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3. China bans Japanese seafood imports over nuclear wastewater discharge
Japan on Thursday started discharging tainted water from the ruined Fukushima Daiichi nuclear power plant over the objections of fishing communities, environmentalists and China, which responded by banning all seafood imports from Japan. Plant operator Tokyo Electric Power started pumping small quantities of nuclear wastewater from the plant, which was wrecked in a 2011 tsunami, two days after Japan's government approved the plan. Monitors from the United Nations, which also signed off, were dispatched to observe. The full discharge is expected to take 30 to 40 years. China called the project "extremely selfish and irresponsible." Critics say there's no long-term data to indicate what harm it could cause.
4. Stock futures inch up ahead of Powell speech
U.S. stock futures edged higher early Friday as investors awaited a high-profile speech by Federal Reserve Chair Jerome Powell at the central bank's annual symposium in Jackson Hole, Wyoming. Futures tied to the Dow Jones Industrial Average and the S&P 500 were up 0.3% at 6:30 a.m. ET. Nasdaq futures were up 0.1%. All three of the main U.S. indexes fell by more than 1% on Thursday as a rally that followed Nvidia's artificial-intelligence-fueled blockbuster earnings report fizzled. T-Mobile shares fell by more than 2% as the company said it would lay off 5,000 workers, 7% of its workforce, to cut costs as competition intensifies in the wireless industry.
5. Dollar Tree says theft dented profit margin
Dollar Tree on Thursday reported that its gross profit margin fell to 29.8% in the second quarter, compared to 32.7% a year earlier, largely due to "shrink," the term retailers use to describe inventory lost to theft and damage. Changing consumer preferences and higher fuel prices also contributed to the discount chain's rough quarter. Dollar Tree is taking steps to fight "shrink," including locking up some items and discontinuing others. Dollar Tree, Dollar General and other discount stores have long struggled with theft and even violent robberies in their stores, which often operate with just a few employees. Shares of Dollar Tree, which just agreed to conduct a nationwide safety assessment after worker complaints, dropped 10% on Thursday.
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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.
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