Summary
United States: The Week Data Converged to Reveal a Clear Slowing in Activity
- Roughly four months since Liberation Day and after a run of broadly benign initial readings on the economy, data this week revealed broad and unambiguous signals that growth has slowed markedly in the first half of the year.
- Next week: Trade Balance (Tues.), ISM Services (Tues.)
International: Foreign Central Banks at the Forefront
- Foreign central banks were at the forefront this week. Central banks in Japan, Canada, Brazil, Colombia and Singapore held monetary policy steady, while central banks in Chile and South Africa all delivered 25 bps policy rate cuts. In economic data, Eurozone Q2 GDP was firmer than expected, edging up 0.1% quarter-over-quarter, while July core inflation was steady at 2.3% year-over-year. China’s July PMIs softened, suggesting slower growth over the second half of this year.
- Next week: NZ Labor Market Data (Wed.), Bank of England Policy Rate (Thu.), Banxico Policy Rate (Thu.)
Interest Rate Watch: To Cut or Not to Cut?
- As widely expected, the FOMC left the fed funds rate unchanged at the conclusion of its meeting on Wednesday. The Committee has now held the policy rate steady at 4.25%-4.50% for five consecutive meetings. A cut at the FOMC’s next meeting in September is still up in the air, and upcoming economic data will be critical in determining the future path of monetary policy.
Credit Market Insights: Signs of Consumer Caution in Credit Card Borrowing
- Household finances are looking stronger than they have, but consumers aren’t celebrating just yet. While debt levels are cooling and balance sheets are improving, rising savings and lingering uncertainty hint at a more cautious, uneven path ahead for spending.
Topic of the Week: Housing Prices Fall but Affordability Contracts
- Housing affordability remains under pressure despite recent declines in home prices. Although prices have softened slightly, elevated mortgage rates and rising ownership costs—including insurance, taxes and maintenance—continue to make homeownership unaffordable for many families. The Atlanta Fed reports that owning a median-priced home now consumes 53% of median household income, the highest on record.
