TRADE TENSIONS TRIP TRADERS... Friday, China unveiled retaliatory tariffs, and the President responded by ordering American companies to look for "an alternative to China," and the three major stock indexes ended down for the week.
Traders were initially heartened after Fed Chair Powell's Jackson Hole speech left the door open for a rate cut in September, as a hedge against "a global slowdown," though "the U.S. economy has continued to perform well overall."
How well? Solid earnings from major retailers show consumer spending that drives 70% of the economy is very healthy. Wages have grown above 3% 12 months in a row, the longest streak since 2007, and unemployment nears a 50-year low.
The week ended with the Dow down 1.0%, to 25629; the S&P 500 down 1.4%, to 2847; and the Nasdaq down 1.8%, to 7752.
In bonds, investors sought a safe haven in Treasuries, though the 30YR FNMA 4.0% bond ended down .06, to $103.64. Freddie Mac reported the national average 30-year fixed mortgage rate fell to another three-year low in their Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
DID YOU KNOW?... First American says single-family starts are a more reliable recession indicator. They were down 20% or more year-over-year before four of the past five recessions, while the yield curve inverted 31 times without a subsequent recession. (Please note: single-family starts were UP 1.9% year-over-year in July.)
