Markets react to sluggish Chinese exports, small and midsize bank downgrades

Aug. 8:

Markets are reacting to China’s exports dropping sharply, as well as reports that credit ratings agency Moody’s has announced downgrades on 10 small and midsized banks.

This morning, the Dow traded down and Treasury yields were down relative to Monday morning.

Non-revolving loans drove spike in outstanding credit

Consumer credit rose $17.847 billion in June, a big jump from May’s $9.457 billion increase. Non-revolving credit, such as auto loans and student loans, drove the June increase in consumer credit, while revolving credit decreased slightly.

Trade deficit fell to $65.5 billion last month

The trade deficit dropped to $65.5 billion in June, according to the Trade Balance Report. The goods deficit shrank by $2.8 billion and the services surplus was down less than $0.1 billion.

Economic calendar

Thursday, Aug. 10

• Consumer Price Index
• Weekly Initial Jobless Claims
• Monthly Budget Statement

Friday, Aug. 11

• Producer Price Index
• University of Michigan Consumer Sentiment

Treasury calendar

Tuesday, Aug. 8

• $42 billion auction of three-year Treasury notes

Wednesday, Aug. 9

• $38 billion auction of 10-year Treasury notes

Thursday, Aug. 10

• $23 billion auction of 30-year Treasury bonds

By Mike Kraft, Executive Director and Commercial Real Estate Treasurer for Commercial Banking