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JULY 19, 2023

XRP RESILIENCE

Despite the recent slump in the crypto market, XRP has shown resilience and is working towards reclaiming its yearly high. As of 8:00 AM CST, XRP rose by 5.32% and is currently valued at $0.80. This surge for XRP follows positive developments in the ongoing legal case between Ripple and the U.S. Securities and Exchange Commission (SEC), as the court directed both parties to consider a settlement conference. Ripple had a significant victory on July 13 when the court ruled against the SEC’s claim that XRP was a security. As a result, XRP has seen a 68.9% increase in value for the week.

NOT AS GOOD AS EXPECTED

Goldman Sachs reported lower-than-expected profits as the bank faced challenges in trading and investment banking, leading to a 58% drop in second-quarter profit to $1.22 billion, or $3.08 per share, and an 8% decline in companywide revenue to $10.9 billion. The disappointing results were attributed to writedowns related to commercial real estate and the sale of its GreenSky lending unit, with charges of $504 million and $485 million, respectively. As a result, Goldman Sachs shares have dipped by almost 2% this year compared to an 18% decline in the KBW Bank Index. Nevertheless, it is worth noting that despite these results, there remains the possibility of exceeding projected guidance based on improved activity late in the quarter. In addition, analysts have shown interest in the bank’s plans to retreat from consumer banking, including discussions to potentially sell their Apple Card business to American Express, however, these talks remain uncertain.

MORTGAGE RATES PULLED BACK

According to the Mortgage Bankers Association’s report, mortgage interest rates experienced a decline last week, after witnessing a significant surge at the beginning of July. This decrease led to increased demand for refinancing but did not provide much relief for potential homebuyers. The total volume of mortgage applications saw a modest rise of 1.1% compared to the previous week. Additionally, the average contract interest rate for 30-year fixed-rate mortgages reduced to 6.87% from 7.07%, resulting in a heightened interest in refinancing among current homeowners. Nonetheless, applications for new home purchases experienced a decline of 1% for the week, further affected by the scarcity of housing supply and escalating prices. Currently, mortgage rates have remained relatively stable, hovering around the high 6% range for 30-year fixed mortgages.

STUDENT LOAN PAYMENTS RESTART

As federal student loan payments are set to restart in September, a new study by TransUnion highlights the potential financial impact on millions of Americans, with about 27 million student-debt holders required to start making payments again after a pandemic freeze of over three years. The study reveals that approximately half of those affected will have monthly payments above $200, while one in five will face payments of over $500. While this adjustment may pose challenges for some households, the Biden administration has introduced a 12-month program to support borrowers during this transition period. Borrowers who experience difficulties making payments won’t face adverse consequences until September 2024, and missed payments will not be reported to credit bureaus or referred to debt collection agencies during this time, although interest will continue to accrue.

INTERNATIONAL NEWS

Euro-zone underlying inflation, a crucial measure of price increases monitored by the European Central Bank (ECB), accelerated more than initially reported in June, solidifying expectations of an upcoming interest-rate increase. According to Eurostat, the statistical office of the EU, core consumer prices, excluding volatile elements like food and energy, rose 5.5% year-on-year, surpassing the preliminary estimate of 5.4% and the May reading of 5.3%. Following this report, some ECB members have expressed differing views on the matter, with Dutch central bank chief Klaas Knot suggesting that core inflation has “plateaued,” while ECB Vice President Luis de Guindos remains cautiously optimistic that underlying inflation may be at its peak. Moreover, experts predict that underlying price growth will continue to exceed the overall figure until the end of 2024.

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