An Important Week for More Data-Dependent Fed

July 31, 2023

An Important Week for More Data-Dependent Fed Photo

As expected, the Federal Reserve (Fed) delivered another interest rate hike during last week’s meeting, bringing short-term interest rates to the highest level in more than 20 years.1 Since the current rate-hiking cycle started in March 2022, Fed Chair Jerome Powell has emphasized the need for policymakers to prioritize reigning in high inflation. However, during last Wednesday’s post-meeting press conference, Powell assumed a more neutral posture emphasizing the importance of incoming economic data for Fed policy decisions moving forward.

Christine Lagarde, president of the European Central Bank, echoed a similar dovish shift following the bank’s interest rate hike last Thursday.2 Equity and credit markets continued to grind higher on the prospect of more stable monetary policy from global central banks.

This week’s economic calendar will give Fed policymakers plenty to digest with the Senior Loan Officer Opinion Survey on Bank Lending Practices out Monday, manufacturing and service sector purchasing managers’ index reports on Tuesday and Thursday followed by the July employment report on Friday.3



1CNBC – Fed approves hike that takes interest rates to highest level in more than 22 years; 7/26/23

2AP – European Central Bank hikes interest rates to combat inflation and leaves door open to more; 7/27/23

3MarketWatch – U.S. Economic Calendar; as of 7/31/2023

Tags: Federal Reserve | Interest rates | Inflation | European Central Bank | Equity markets | Credit markets

< Go to Monday Morning Perspectives

This blog post is for informational use only. The views expressed are those of the author(s), and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice.  The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete.  Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements.  Actual results may differ significantly.  Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.

Investing involves risk, including possible loss of principal.  Past performance is no guarantee of future results.  All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.

High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.

All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.

Subscribe to Our Publications