Latest Insights

On Wednesday, the US Treasury’s credit rating was downgraded by Fitch, a nationally recognized statistical ratings organization that assesses creditworthiness of various institutions, including sovereign entities. The rating was lowered from the highest level of “AAA” to “AA+”, which is only one notch below the highest possible credit rating of “AAA.” The action comes just two months after Fitch warned that it was weighing cutting the credit rating when lawmakers were in political battles over raising the nation’s debt limit.

As was widely anticipated, this week the Federal Open Market Committee (FOMC) voted unanimously to raise the federal funds rate by 0.25% to a target range of 5.25% to 5.50%, the highest level in over 20 years. Fed Chair Powell maintained that the FOMC will remain data dependent going forward, and that they do not anticipate a recession, leaving the option open for the possibility of additional rate hikes in the future if needed.

This week, market participants were focused on inflation and associated implications for monetary policy. The June Consumer Price Index (CPI) came in slightly below expected, with the headline CPI up 0.2% month-over-month and 3.0% year-over-year, decelerating from 4.0% year-over-year in May.