New home construction and new home sale have been a plus, but manufacturing is in decline against the backdrop of possibly prolonged trade drama with China.
Housing positive:New home construction and new home sales are the primary positive trends so far this quarter, as lower mortgage rates are leading to the highest pace of new home sales in 12 years. Limited inventory and high prices are not producing the same results in sales of existing homes.
Manufacturing declines:The latest data on durable goods orders and purchasing activity in manufacturing point to a big decline in manufacturing activity as tariffs and trade disruptions and uncertainty take a toll.
Trade drama:The trade drama with China continued, and the growing view is that the trade impasse with China may last for quite some time. That view rattled the stock market and pushed bond rates to lows not seen since 2017, with investors moved into the safe haven of U.S. Treasuries.
Auto loans:Despite lower bond rates, auto loan did not drop. They remain at 9-year highs. It will take lower rates and more incentives to see any meaningful improvement in retail new vehicle sales.
Looking ahead: This week, we’ll get May consumer confidence and final consumer sentiment data, revised estimates for growth in first quarter GDP, and April pending home sales and personal income and spending.