Sometimes the most interesting insights come from places you’d never expect. A bit ago I had an Uber driver who was also a retired truck driver. Although he is retired, his sons are still active and, in the business, daily. Throughout his trucking career, there were many recessions. He said that he could always predict when they were coming based on the number of trucks parked at rest stops. When the economy is thriving, it was often hard to find a spot to park in. Right now, however, he has heard that there are many open parking places, which indicates an economic slowdown. As basic as this is, he may be onto something.
Yesterday, the September Cass Freight shipment index was down on a year over year basis for the tenth month in a row. With weakness shown across most modes of transportation, this is a forward indicator of what is to come. When consumers are planning fewer purchases, retailers ship in fewer products. This will directly impact GDP, which is the strongest indicator of consumer financial and economic health. Some predict that the slower shipments will create a negative GDP in the 4th quarter reports. With a recession being defined as two consecutive quarters of negative growth, this would be a big concern.
After mortgage bond prices took a big hit the last two weeks, bonds are showing signs of stabilizing. They are now sitting in between their 100-day moving average as a floor and their 25 DMA as a ceiling. If bond prices can make a break higher, we will see interest rate pricing improve. However, anything can happen at this point. Therefore, be very careful if you choose to float your interest rate.