Skip to main content
Market Update

Job market persists, housing prices still high in advance of July FOMC meeting

July 24, 2023
  • amol dhargalkar headshot


    Amol Dhargalkar

    Managing Partner, Chairman
    Global Head of Corporates

    Kennett Square, PA


Economic indicators came in as a mixed bag last week, with labor market growth and housing prices remaining consistent. Markets prepared for the upcoming FOMC meeting, pricing in an all-but-guaranteed rate hike.

Job market, wages persevere while housing still struggles

Initial jobless claims came in at 228,000 last week, below expectations of 240,000 and down 9,000 from the previous period. This marks the second straight weekly decline in new claims for unemployment benefits, corroborating the persistent story of a (seemingly unflinchingly) tight labor market. After the addition of 209,000 jobs in June, metrics remain strong based on historical data, though the pace is slowing after more than two years of explosive growth.

Wage growth has continued as well, with average hourly earnings rising by 0.4% in June (4.4% increase year-over-year). This is another indicator that the work of the FOMC is not yet complete, as that statistic is more than double their target of 2% inflation. While consumer spending has come down from this time last year, it’s possible that this increase in cash to consumers will push spending back up, maintaining an inflationary environment.

Housing figures were not as bright from a consumer perspective last week, as existing home sales fell 3.3% from May to June (down 18% from this time last year). In a perfect storm of record-high prices, continued housing shortages, and mortgage rates still near 7%, first-time buyers have few options accessible to them (and current homeowners have little incentive to sell). Interested buyers should keep a pulse check on upcoming FOMC language, as mortgage rates could start to come down once the Federal Reserve indicates that it is done raising interest rates.

Time to take soft landing seriously?

With most economic indicators remaining strong in recent months, lead economists and forecasters are beginning to recant their previous predictions of a coming recession. A Bloomberg survey published last week showed that June inflation figures, as well as personal consumer expenditures (PCE) forecasts for the remainder of the year into 2024, have inspired a more optimistic view on recession risk levels. Consumer sentiment continues to grow as well, with the consumer sentiment index reaching its highest level in almost two years. After the Supreme Court shut down President Biden’s massive student debt relief plan, student loan payments are set to resume this fall, which could reverse the increases in sentiment as well as diminish the amount of cash in people’s pockets.

The prospect of improved long-term economic growth expectations, coupled with markets expecting rate cuts to come more gradually, bolstered both short-term and long-term rates last week; 2-year swap rates were up 8 basis points with 10-year rates up 2 basis points. For companies looking to hedge floating rate debt, many are working to lock in soon before swap rates climb even higher should the market adjust its expectations that the Fed will remain hawkish for longer. Similarly, companies issuing fixed-rate debt have used pre-issuance hedging to remove longer-term risk.

Looking ahead

Markets are nearly unanimous in their expectations of a 25-basis-point rate hike by the FOMC at their meeting this Wednesday, though Chair Powell’s press conference remarks could shift market predictions for the coming months. This Friday also brings PCE data from June. A portion of the “Magnificent Seven” have earnings releases this week (Microsoft Corp., Amazon, Alphabet (excluding Google), and Facebook Inc.), along with several other large-cap companies.

Subscribe to receive our market insights and webinar invites

About the author

  • Amol Dhargalkar

    Managing Partner, Chairman
    Global Head of Corporates

    Kennett Square, PA

    Amol Dhargalkar is a Managing Partner and Chairman for Chatham’s Board of Directors. He is the Global Head of the Corporates sector and brings over 20 years of experience in derivatives capital markets expertise.


Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit