How the Fed crushed the luxury-watch boom

• The secondary market for luxury watches has sunk to its lowest level in over two years.

• The WatchCharts market index and has slumped 37% from a record high in March last year.

• Elevated interest rates and heightened economic uncertainties are seen as sapping demand.

Since late 2022, Wall Street has been rife with predictions for the Federal Reserve’s interest-rate increases to wreak havoc in the US economy and stock market.

While the broader economy has held up surprisingly well, the monetary blitzkrieg has sparked a downturn of a different kind — a rout in the secondary market for luxury watches.

The WatchCharts Overall Market Index — which tracks the prices of 60 timepieces from top brands including Rolex, Patek Philippe, and Audemars Piguet — has plunged 37% from a March 2022 peak. A separate index for just Rolex models fell 31% over a similar period.

The US central bank’s aggressive monetary tightening from March 2022 through July this year is seen as a key reason for the slump in watch prices. Higher interest rates have fueled fears of an economic downturn, spurring investors to scale back luxury spending and boost savings. A setback in the crypto market, also precipitated by rate rises, has also hurt demand for watches.

The costliest timepieces suffered the worst declines. Those in the $50,001 to $100,000 price bracket slumped over 10% in the past 12 months, while the $10,001 to $20,000 group fell about 7%, according to WatchCharts data. The $5,001 to $10,000 band also dropped 7%.

Luxury watches have underperformed stocks since March 2022, when the Fed started raising interest rates. The S&P 500 index of US large-cap shares is up by over 12% since then.

Certain chronometer brands have felt the bite more than others. The Rolex Market Index, which tracks the 30 most valuable models, is down 8% from a year ago, while the Patek Philippe index lost 16%. Audemars Piguet saw the sharpest losses, down 19% year on year, WatchCharts data showed.

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