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The Fed is due a big decision on interest rates

A big rate hike is in the cards to tackle inflation, but it risks a recession and a spike in mortgage rates.

An angled picture of a home with a dark brown facade, a "for sale, Redfin" sign in the foreground. In the background, the Seattle Space Needle is visible
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  • Morgan Haefner
By Morgan Haefner

Deputy email editor

Published

Good morning, Quartz readers!

Here’s what you need to know

Investors await the Fed’s decision on interest rates. A 0.75-percentage-point rate rise is in the cards.

Mortgage rates in the US shot past 6%. As the hot housing market begins to cool down, real estate firms Redfin and Compass announced job cuts.

The euro and the US dollar could be a month away from parity. Wells Fargo predicts the euro, currently worth $1.04, is about to reach $1 for the first time in 20 years.

Coinbase is laying off 18% of its staff. The cryptocurrency exchange platform is cutting about 1,000 jobs as its executives warn of a “crypto winter.”

US tampon manufacturers pledged to ramp up production. Shortages across the country, attributed to supply chain issues and staff shortages, are driving up menstrual product prices.

BTS announced a hiatus, and HYBE stock plunged. Neither the K-pop group’s agency, which lost $1.7 billion, nor its fans were bulletproof to the news.  

What to watch for

Storefronts are covered up in Moscow.
Image copyright: Reuters/Shamil Zhumatov
FILE PHOTO: A Yandex Food courier rides a bicycle past the temporarily closed Prada shop and business property put out for rent, in Stoleshnikov Lane, which is one of the city’s most expensive shopping areas accommodating numerous boutiques and luxury shops, in central Moscow, Russia, May 27, 2022. REUTERS/Shamil Zhumatov/File Photo

On Thursday, Russia will release its final GDP figures for the year’s first quarter. Broadly, they will confirm the preliminary data released in May: a 3.5% rise from the previous year.

But the certainty ends there. That first quarter was only partially affected by sanctions and military expenditure. Subsequent quarters will likely reveal a very damaged economy. Russia’s economic ministry expects GDP to shrink by 7.8% in 2022; a World Bank report predicts 8.9%; another economist forecasts a catastrophic 30% contraction.

On June 24, Russia has to make a $159 million bond payment—except that the US Treasury has canceled its license, making such payments harder. If Russian data can be trusted, a better picture of its economy will emerge in August, when second-quarter GDP figures show the full impact of sanctions.

Vaccine inequality is here to stay

Monkeypox hasn’t officially been designated as a health emergency of international concern, but rich countries are already hoarding smallpox vaccines. In the absence of dedicated monkeypox immunization, it can provide protection up to 85%.

Bavarian Nordic, the maker of the most updated vaccine against smallpox, has signed several contracts (mostly in confidential terms) with governments wishing to procure more than enough doses to protect their vulnerable populations.

So far, the US, a key investor in the vaccine’s development, has ordered 500,000 doses on top of the 1.5 million it had in its stockpile. The rush to procure doses echoes the hoarding that led to severe covid vaccine inequality.

The World Health Organization has asked countries to share information on their smallpox vaccine and therapeutics stockpiles, and to be available to share them with countries in need. The call has yet to be answered.

A Sriracha shortage is coming

Lovers of Sriracha, Chili Garlic, and Sambal Oelek may have to go without their favorite hot sauces for months. An ongoing chili shortage, stemming from drought and supply chain snafus, have led Huy Fong Foods to halt Sriracha production. The company has told stores that the sauces on their shelves is all they’ll have for a while.

Huy Fong produces 20 million bottles of Sriracha per year, requiring about 100 million pounds of peppers. Where are all those peppers from? They’re usually sourced from Mexico, California, and New Mexico—all of which are experiencing droughts.

A map showing where drought is taking place in North and Central America. New Mexico, California, and Mexico are among the hardest hit places.

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