Good morning investors! Fed gave us what we expected, and today the market will be closed so enjoy the day.
Today we cover:
No rate cut
Crypto cards?
Making credit cards more affordable
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Which of these is outside of Fed's jurisdiction?
📊 Economy and News
Fed Holds Rates Steady, Signals Two Cuts in 2025
The Federal Reserve kept its key rate at 4.25%-4.5%, unchanged since December, amid higher inflation and lower growth forecasts.
The FOMC’s “dot plot” projects two rate cuts by year-end, with four total by 2027. Two 25-basis-point rate cuts are expected but seven Fed officials don’t think that’ll happen.
GDP growth is now expected at 1.4% for 2025, down 0.3 points, while inflation is forecast at 3%.
Unemployment is projected to rise to 4.5%.
Despite President Trump’s push for lower rates, Fed Chair Powell emphasized waiting for economic clarity. Markets remained flat, reflecting cooling housing and retail sectors.
Global hits:
South Africa’s inflation holds steady at 2.8%, opening door for rate cuts.
Japan’s exports post first drop in 8 months as US tariffs hit auto firms.
Trump isn’t clear if the US will directly intervene in the Iran-Israel crisis.
News from the UK: UK inflation eased to 3.4% in May, matching forecasts, helping Sterling jump slightly. The Bank of England is expected to hold rates as it watches Middle East-driven energy market risks. On the other hand, annual house price growth cooled to 3.5% from 7.0% in March. But, UK to implement new car, aerospace tariffs with US by end of June
Family homes: U.S. single-family homebuilding rose 0.4% in May to a 924,000-unit annual rate, but permits for future construction fell 2.7% to 898,000 units, signaling a weak housing market.
Tariffs on lumber, aluminum, and steel are driving up costs, while excess unsold homes and higher borrowing costs deter buyers. Builder sentiment hit a 2-1/2-year low in June, with more cutting prices. The Federal Reserve is expected to keep interest rates at 4.25%-4.50%. Residential investment dipped slightly in Q1 after a 2024 rebound.
Something from China: The jobless rate for 16 to 24-year-olds in China, excluding college students, dropped to an 11-month low of 14.9% in May. Also, China talks up digital yuan in push for multi-polar currency system.
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📈 Stocks
S&P 500 5,980.87 (-0.031%)
DJIA 42,171.66 (-0.10%)
NASDAQ 19,546.27 (+0.13%)
BRENT CRUDE 76.20 (-0.65%)
* Prices as of Mar 3rd, 12:20 AM UTC
Coinbase, Circle Stocks Soar After Senate Passes Stablecoin Bill
Shares of Circle and Coinbase surged after the Senate passed the GENIUS Act, establishing a federal framework for stablecoins. Circle, issuer of USDC, jumped 33%, while Coinbase, sharing 50% of USDC revenue, rose over 16% to $295.29.
The bill, which requires full reserve backing and audits, could drive growth in the $260 billion stablecoin market. It now awaits House approval, where regulatory differences may delay passage.
Coinbase also launched a new stablecoin payment product for merchants. Overall, it is great news for people but names like MasterCard and Visa fell since Coinbase and other crypto firms are challenging traditional cards in the $6 trillion online payment market. These companies charge 1.5-3% per transaction, but Coinbase Commerce offers a flat 1% fee, shaking up the credit space.
There is a lot happening in the arena. A few days ago, JPMorgan Chase announced a pilot program to test tokenized USDC, dubbed JPMD, on Coinbase’s Base chain, exploring the stablecoin trend.
The bank is also collaborating with Nodal Clear to work with regulators, aiming to allow USDC as collateral in U.S. futures trading. Meanwhile, the GENIUS Act, tied to these developments, advances to the House for further debate.
Exciting: Klarna to launch unlimited mobile plan in US, joining fintech trend. Also, rumors say that Apple is looking to make ‘premium’ priced folding iPhones starting next year. Lastly, US FDA approves Gilead's twice-yearly injection for HIV prevention.
💵 Personal Finance
How to lower your credit card’s annual percentage rate
Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. In the wake of the recent rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to almost 21% today — near an all-time high.
Annual percentage rates will start to come down once the Fed cuts rates, but even then they will only ease off extremely high levels. Since the central bank now projects it will cut interest rates just once in 2024, APRs aren’t likely to fall much.
Rather than wait for a modest adjustment in the months ahead, borrowers could call their card issuer and ask for a lower rate, switch to a zero-interest balance transfer credit card or consolidate and pay off high-interest credit cards with a personal loan.
Cards offering 15, 18 and even 21 months with no interest on transferred balances are still out there.
Balance transfer cards are still your best weapon in the battle against credit card debt.
A balance transfer credit card moves your outstanding debt from one or more credit cards onto a new card, typically with a lower interest rate.
Alternatively, consumers should consider exploring lower interest products to help consolidate their higher interest debt and lower their monthly payments.
Currently, the interest rate on a personal loan is just above 12%, on average.
If you don’t have good enough credit to get a zero-percent balance transfer card, a personal loan can be a good alternative.
And consolidating comes with the added benefit of letting you simplify outstanding debts while lowering your monthly payment.
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👩🏽⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.