- The Fed lowered rates for the second time this year.
- Housing sales of new and existing homes gained.
- Credit defaults, delinquencies deteriorate.
The stock market failed to make it four straight weeks of gains as the UAW strike at GM, turmoil in the Middle East, floods in Texas, and global economic weakness collectively dampened moods. The Fed also made news every day, and, when the Fed has to take action, it’s not usually because things are looking good.
Fed rates: The Fed lowered official short-term policy rates for the second time this year. Longer-term rates drifted lower, not as a result of the Fed rate cut but more in reaction to concerns about a reversal in China-U.S. trade progress and heightening concerns about global weakness. Overnight financial system liquidity problems are causing the Fed to buy billions of dollars in treasuries to keep short-term rates in line with their rate policy.
Housing gains: The best news was in housing as both new construction and existing home sales have seen gains in July and August. Housing is starting to see the benefit of lower interest rates.
Credit warning signs: Credit defaults are growing, and auto loan severe delinquencies are warning signs about the health of consumers.
Dealers less optimistic: Dealers collectively are less optimistic about the fourth quarter, but independents have become pessimistic in contrast with franchised dealers who still see a strong market. Learn more details on our Q3 Cox Automotive Dealer Sentiment Index.
Looking ahead: This week, we’ll get August new home and pending home sales data and personal income and spending data as well as September consumer confidence and final consumer sentiment readings. We’ll be watching for progress on negotiations between the UAW and GM.