Central banks around the world have made borrowing costs more expensive

Good morning, dear readers. Phil Rosen here is writing to you from a coffee shop in Manhattan.

Powell and Co. decided last week to “skip” an interest rate hike and held it steady after ten straight hikes but warned more hikes could still be coming.

The rest of the world did not follow suit.

The central banks of the UK, Turkey, Norway and Switzerland all hiked interest rates yesterday.

Here we go.

Bank of England building in London

The Bank of England is the central bank of the United Kingdom.

Maremagnum/Getty Images

1. Let’s start with the Bank of England Decision to raise interest rates by 50 basis points and reduce borrowing costs to 5%.

The move from across the pond surprised experts everywhere, with policymakers practically saying that high inflation and a tight labor market justified the decision.

UK inflation rose by 8.7% in the 12 months to May and core inflation rose to 7.1% from 6.8% in the previous month.

“Inflation is irrelevant, so the Bank of England had no choice but to raise interest rates even more this time, despite the broader impact of rising borrowing costs,” said Myron Jobson, an analyst at Interactive Investor.

UK interest rates are now at their highest level since 2008.

Meanwhile the Central Bank of Türkiyeraised interest rates by 650 basis points to 15%, which was somehow lower than markets were expecting.

The move reflected a change of course following the re-election of President Recep Tayyip Erdogan, who pressured the bank to cut interest rates last year despite rising inflation.

Inflation in Turkey hit a two-decade high of 85.5% in October, but fell to about 40% in May.

A key result of yesterday’s rate hike was that the Turkish lira fell 4% to hit its lowest level on record.

Buying a single US dollar currently costs around 25.69 lira (as of Friday morning).

Just to cover our basics: Norway’s central bank raised its core lending rate by half a percentage point and Swiss policymakers raised their key interest rate by a quarter point.

What is your outlook for the global economy over the next six months? tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.

In other news:

Merchant Nyse Screens

: Traders work the floor of the New York Stock Exchange (NYSE) in New York City on June 1, 2023. The Dow was lower in morning trade despite the passage of the US House of Representatives’ debt ceiling bill.

Spencer Platt/Getty

2. US Stock Futures fall early Friday, as investors continue to digest Federal Reserve Chair Jerome Powell’s comments that further rate hikes are likely. Find out about the latest market movements.

3. Receipts on deck: CarMax and Apogee Enterprises both report.

4. Goldman Sachs just named 50 stocks that will grow their profitability faster than the rest of the market. Even as macroeconomic conditions slow, certain names could still see plenty of upside over the next 12 months. Check out the full list.

5. Homeowners have less equity today than they did a year ago. Average equity per borrower fell 1.9% in the first quarter compared to the year-ago period, according to CoreLogic data. It is the first annual decline since 2012.

6. Market expert David Rosenberg said the tech-stock frenzy reminded him of the dot-com bubble. At the time, investors were similarly enthusiastic about new technologies and skeptical about recession forecasts, he explained. In his view, the US economy is heading for a downturn today.

7. Short sellers bet more than $1 trillion against US stocks. According to S3 Partners, the top five shorts include Tesla, Apple, Microsoft, Nvidia and Amazon. The bearish bets come as the S&P 500 is up more than 13% this year.

8. The co-head of an AI-powered quant fund shared two stocks his model is currently heavily betting on. Learn the names and the simple strategy investors can use to pick stocks using AI.

9. BMO Capital Markets selected their favorite cheap, fast-growing stocks from the little-known industrial sector. This corner of the market is brimming with opportunity, strategists say, and it outperformed in June. Here are 16 stocks to keep an eye on.

Berkshire Hathaway stock

market insider

10. Warren Buffett just donated roughly $5 billion worth of Berkshire Hathaway stock. After donating to the Gates Foundation and other charities, the billionaire has given up more than half of his stash.

Curated by Phil Rosen in New York. Feedback or tips? tweet @philrosenn or E-Mail prosen@insider.com.

Edited by Jason Ma in Los Angeles and Nathan Rennolds (@ncrennolds) in London.

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