Last Week in Review: Slowing but Growing
Recession fears were back in full swing this past week, thanks to the weakest manufacturing report since June 2009, which was the last month of the Great Recession.
Manufacturing makes up 12% of our economy, while consumer spending makes up nearly 70%. So even though the consumer remains strong, markets were spooked that this is the first sign of cracks within the U.S. economy.
Trade uncertainty, increased tariffs, and softening demand were reasons cited by respondents for the soft reading.
Stocks hate bad news, uncertainty, and recession talk, so the initial reaction was a significant Stock selloff. Typically, when Stocks struggle, Bonds and home loan rates benefit, but the improvements were modest at best.
Here are three reasons rates have seemed to stall — think of a “wait and see” attitude.
How the economy performs in the months ahead and responds to pending Fed rate cuts will likely determine which path home loan rates will follow. But the biggest story and wild card heading into October will be the U.S./China trade talks. Positive developments can change everything in a minute and home loan rates could suffer. And the opposite is also true.
Bottom line: For those looking to take out a mortgage, it’s tough to see a better situation for the consumer. The economy remains strong and rates are at three-year lows. In order for rates to get much better, the economy would likely have to perform worse, potentially much worse…which could happen, but let’s not wish for it.
Contact your Account Executive with questions.
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