Interest Rate Hikes Unleash Economic Constriction in US
Rising interest rates are putting pressure on key sectors of the U.S. economy, particularly housing and commercial real estate.
The State Street SPDR S&P 500 ETF Trust (SPY) and other major indices rallied on Wednesday after a Federal Reserve voting member made dovish comments that reduced the likelihood of an interest rate hike at the September FOMC meeting to 58.64%.
However, this respite is short-lived as interest rates continue to crimp large sections of the economy.
The housing market is particularly vulnerable due to persistent affordability issues and limited prospects for lower mortgage rates.
Homebuilders and housing-related equities like Home Depot are underperforming, while companies reliant on financed big-ticket sales, such as General Motors, Malibu Boats, and THOR Industries, face significant consumer payment stress.