Rates Uncertain Pending Next Fed Decision – Fixed Income Update

Fixed-income markets delivered mixed results in July as Treasury yields swung on concerns over inflation and slowing growth. Long-term yields dipped late in the month after weaker-than-expected employment data from the Bureau of Labor Statistics sent investors into bonds, lifting prices and pushing yields lower.

The disappointing jobs report effectively did some of the Federal Reserve’s work, driving down yields without the central bank taking action. Labor-market data remains a key driver for bonds, as signs of cooling employment often point to softer consumer spending and easing inflation pressures.

The average rate on a 30-year fixed conforming mortgage fell to 6.72% on July 31 from 6.91% at the start of the year. Any Fed rate cuts would likely provide further support to the housing market by lowering borrowing costs. (Sources: FreddieMac, U.S. Treasury, BLS)

Equities Navigate Tariffs In July – Domestic Stock Overview

Despite persistent trade tensions and macroeconomic uncertainty, U.S. equities extended their gains in July. The S&P 500 and Nasdaq advanced, buoyed by strong corporate earnings and renewed consumer confidence, showing resilience to trade and data headwinds. Information technology, utilities, and industrials led sector performance, while others delivered mixed results.

Weaker employment data raised concerns for equity markets, as fewer companies are hiring and job seekers face increasing difficulty securing positions. Such labor-market trends can dampen economic growth while easing inflationary pressures. (Sources: Bloomberg, S&P)

How Autos Have Become More Fuel Efficient Over The Decades – Auto Industry Overview

Technological innovation has transformed the auto industry, making vehicles both more efficient and electronically sophisticated. Advances have boosted horsepower while reducing fuel consumption, with modern four-cylinder engines now matching the output of the V8 “fuel hogs” of the 1970s and 1980s.

Data from the U.S. Energy Information Administration, which has tracked fuel use since 1949, shows a steady decline in consumption per vehicle, translating into improved miles per gallon. The average vehicle achieved roughly 13 MPG in 1949; the most recent data puts that figure at 18.4 MPG. (Sources: U.S. EIA)

Artificial Intelligence (AI) Is Elevating The Cost of Electricity – Energy Sector Update

The rapid expansion of artificial intelligence across the economy is driving a surge in electricity demand. AI relies on vast server farms packed with high-speed semiconductor processors that require enormous amounts of energy to process data. These facilities—data centers—are often located in remote or extreme climates, but their power needs increasingly compete with residential demand nationwide, contributing to higher utility bills.

As the U.S. power grid strains to meet the needs of consumers, data centers, and manufacturers, the push to expand generation capacity has reached unprecedented levels. Electricity prices in U.S. cities began to outpace historical trends in 2021, coinciding with a sharp increase in new data center construction. The average facility consumes nearly as much power as a small city.

Data centers accounted for roughly 4.4% of total U.S. electricity consumption in 2023, and the Department of Energy projects that share could climb to between 6.7% and 12% by 2028.

(Sources: U.S. Dept. of Energy, Federal Reserve Bank of St. Louis)

What The European Union Exports To The U.S. – International Trade

The United States imports a broad range of materials and finished goods from Europe, with total European Union (E.U.) shipments to the U.S. surpassing $570 billion in 2024. Leading the way are pharmaceuticals and medical products, valued at about $127 billion, followed by automobiles and automotive parts at roughly $57 billion. Machinery, optical products, electrical components, and organic chemicals also represent significant export categories.

Trade with the E.U. stands apart from other partners due to the bloc’s unique structure: 27 member countries with diverse economies and political leadership. Trade negotiations are handled collectively by the president of the European Commission, who speaks for the entire union.

Rising labor costs in Europe have prompted several European automakers to shift some production to the U.S. in recent years. Current trade talks include incentives aimed at encouraging further relocation of manufacturing to American soil. (Sources: EuroStat, U.S. Dept. of Commerce)