Smoke on Cars
Auto Market Weekly Summary
Monday June 24, 2019
Article Highlights
- The “bad news is good news” cycle continued last week as the stock market cheered the Fed acknowledging trade-related economic weakness and low inflation.
- In the auto market, we’re not seeing lower interest rates in auto loans as the risk premium seems to be increasing, especially in subprime.
- Join me for the Mid-Year Review on Wednesday, June 26, to learn how the first half fared.
The “bad news is good news” cycle continued last week as the stock market cheered the Fed acknowledging trade-related economic weakness and low inflation. The Dow Jones Industrial Index ended the week up almost 700 points. Bond yields have tumbled as the financial market sees rate declines as a certainty later this year with a first official rate cut expected in July.
Mortgage rates: The lower rates have led to lower mortgage rates, but those lower mortgage rates are not translating into a clear bounce in home sales, although existing home sales did improve in May. New construction was essentially flat in May. But starts and deliveries of new homes should be higher year-over-year this summer. The median existing-home price in May hit an all-time high of $277,700, up 5% from a year ago.
Auto loans: In the auto market, we’re not seeing lower rates in auto loans as the risk premium seems to be increasing, especially in subprime. These declining market rates are not trickling down to consumers to enable any change in the downward trend in retail new vehicle sales.
Looking ahead: Join me for the Mid-Year Review on Wednesday, June 26, to learn how the first half has fared. This week, we’ll get May new and pending home sales data, May personal income and spending data, and June consumer confidence and sentiment.