Your Evening Briefing: The High Price of High Interest Rates

A measure of US inflation that Federal Reserve Chair Jerome Powell seems to consider an important signpost showed a slowdown last month, the latest good news for a central bank that still hopes to negotiate a soft landing for the economy. But in financial circles, the Fed may be in the minority as the clamor of recession prognosticators returns yet again to a fever pitch. And the rate hikes Powell has been wielding like a broadsword are increasingly causing collateral damage. On Thursday, Wells Fargo fired hundreds more of its mortgage employees, the latest in a series of terminations across the industry as high rates bring home-lending to a grinding halt. Another big financial name is engaging in mass firings, too, albeit for different reasons. Credit Suisse, following years of scandals and management missteps, is terminating at least one third of its debt sales employees globally as part of its latest restructuring—one that seeks to eliminate thousands of jobs while drastically downsizing its investment banking and trading business.

Taiwan Semiconductor Manufacturing will make more advanced microchips at its new $12 billion plant in Arizona, set to open in 2024, after US customers such as Apple pushed the company to do so. Tensions with China have turbocharged US efforts to bring more manufacturing to its shores—especially semiconductors critical to both consumer and defense industries. The Biden administration’s Chips and Science Act, passed this year, offers $50 billion in incentives for companies looking to create semiconductors in America.