Although Fed chairman Powell could not as yet be caught out on any surprising statements during his speech at the Jackson Hole symposium, he did sound more hawkish than dovish. Not exactly something that would cheer investors up after already an unprecedented series of interest rate hikes. As a result, financial markets gradually lost ground during his speech.
Less than three years ago, a US consumer could take out a 30-year mortgage at an interest rate as low as 3%. Fast forward to today: that same mortgage now has an interest burden of more than 7%. And that still makes a big difference.
Higher interest rates not only hurt share prices, but the housing market is also particularly sensitive to interest rates. In the US, many potential home sellers are already feeling the pinch and are not putting their homes up for sale for the time being.
