Market Beats | US Mortgage Rates Drop to Lowest in Nearly a Year; US Housing Starts Fall to Lowest Since May; China Bans Tech Giants From Buying Nvidia Chips; Apple’s smartphone sales in China fell 6%; Foreign Investors Step Up Dollar Hedging; US Consumer Credit Scores Post Biggest Drop Since 2009

—— US Mortgage Rates Drop to Lowest in Nearly a Year; US Housing Starts Fall to Lowest Since May; China Bans Tech Giants From Buying Nvidia Chips; Apple’s smartphone sales in China fell 6%; Foreign Investors Step Up Dollar Hedging; US Consumer Credit Scores Post Biggest Drop Since 2009

1. US Mortgage Rates Drop to Lowest in Nearly a Year

US mortgage rates fell last week to the lowest level in almost a year, sparking a wave of refinancing. The contract rate on a 30-year fixed mortgage declined by 10 basis points to 6.39% in the week ended Sept. 12, according to Mortgage Bankers Association (MBA) data released Wednesday. The group’s refinancing measure jumped to the highest level since early 2022, while the index of home-purchase applications also rose.

This marked the third straight weekly decline in borrowing costs, providing fresh momentum for a housing market that has struggled to gain traction. A sustained drop in mortgage rates could rekindle demand from buyers and encourage more homeowners to put their properties on the market. Investors expect the Federal Reserve to begin cutting interest rates as soon as Wednesday, with additional cuts likely in the coming months.

The MBA’s overall mortgage activity gauge — covering both purchases and refinancing — climbed to the highest level in more than three years.

The weekly survey, conducted since 1990, draws responses from mortgage bankers, commercial banks, and thrifts, and captures over 75% of all US retail residential mortgage applications.

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2. US Housing Starts Fall to Lowest Since May

US housing starts dropped in August to the weakest pace since May, as elevated inventories curbed builders’ willingness to boost production. Government data released Wednesday showed new residential construction declined 8.5% to an annualized 1.31 million units, compared with a median Bloomberg survey estimate of 1.37 million.

Single-family starts fell 7% to an annualized 890,000, the lowest in over a year. Multifamily construction, which had supported overall housing activity in recent months, also declined nearly 12% to a three-month low. Builders have slowed production as the supply of new homes for sale swelled to levels last seen in the mid-to-late 2000s. While borrowing costs have recently dipped — offering some relief for buyers — economists expect oversupply to weigh on construction in the coming months.

The Federal Reserve is widely expected to begin a series of rate cuts starting Wednesday, and separate data showed mortgage rates fell last week to the lowest level in nearly a year, spurring a refinancing boom.

The Atlanta Fed’s GDPNow forecast indicated residential investment will be a slight drag on third-quarter GDP.

Building permits, a leading indicator for future construction, declined 3.7% to an annualized 1.3 million — the lowest in more than five years. Single-family permits also dropped to the weakest level since March 2023.

The number of single-family homes under construction extended its multi-year decline to an annual pace of 611,000, the lowest since early 2021. Regionally, starts fell 21% in the South — the nation’s largest homebuilding region — and also declined in the Midwest, while rising in the West and Northeast.

The housing starts data are highly volatile, with a 90% confidence range for the monthly change between a 19.2% drop and a 2.2% gain.

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3. China Bans Tech Giants From Buying Nvidia Chips

US retail sales climbed for a third straight month in August, rounding out a summer of resilient consumer spending.

According to Commerce Department data, retail purchases (unadjusted for inflation) rose 0.6%, beating all economist forecasts in a Bloomberg survey. July showed a similar gain. Excluding autos, sales advanced 0.7%. Nine of 13 categories registered growth, led by online retailers, clothing outlets, and sporting goods stores — a sign of back-to-school demand. Auto sales rose modestly, surprising some economists who had expected them to weigh on the headline figure.

The report highlights ongoing consumer resilience despite higher tariffs, subdued sentiment, and signs of labor-market weakness. While wage growth has cooled, many households are still seeing pay increases outpace inflation, and wealthier Americans continue to benefit from stock market gains.

Heather Long, chief economist at Navy Federal Credit Union, said: “Consumers say they are gloomy about the economic outlook, but they are still opening their wallets and spending, even on little splurges for themselves and their families. The big question is how long this can continue if layoffs pick up.”

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4. Eli Lilly’s Orforglipron Outperforms Novo’s Rybelsus

Eli Lilly & Co.’s experimental diabetes pill Orforglipron delivered better outcomes than Novo Nordisk A/S’s Rybelsus in the first head-to-head trial between the two treatments.

After 52 weeks, patients on the highest dose of Orforglipron saw a 1.9% drop in blood sugar levels, compared with 1.5% for Rybelsus. Weight loss was also more pronounced: 8.2% (about 18 pounds) for Orforglipron versus 5.3% (around 12 pounds) for Rybelsus.

Lilly also released the first full dataset on Orforglipron’s benefits for obesity this week, presented at the European Association for the Study of Diabetes meeting in Vienna.

Doctors welcomed the findings, highlighting that a pill form is easier to manufacture, easier to take, and could eventually be more affordable, broadening access. Lilly officials pledged rapid market entry.

Chief Scientific Officer Dan Skovronsky told Bloomberg TV:
“It’s probably one of the most important medicines we’ve ever launched from a global health perspective. We’ll do everything we can to minimize the burden on patients, including financial burden.”

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5. Apple’s smartphone sales in China fell

Apple’s smartphone sales in China fell 6% year-over-year in the weeks leading up to the iPhone17 launch, marking a steeper-than-usual pre-release slowdown.

According to Counterpoint Research, sales from other major handset makers including Xiaomi, Vivo, and Honor also declined during the first eight weeks of the third quarter. Overall, China’s smartphone market shrank 2% over that period, despite significant government subsidies to boost consumption.

China remains Apple’s largest market outside the US and a critical growth area. The company had ended a two-year slump in China sales during the June quarter, partly thanks to subsidies. CEO Tim Cook noted on the earnings call that Apple’s iPhone user base in Greater China hit a record, driving consumers toward other Apple products such as Mac, iPad, and Apple Watch. He also emphasized that most buyers of these devices in mainland China were new to the product line.

Still, Apple trails behind local competitors. Counterpoint data showed Apple had just a 12% market share over the summer, ranking sixth, while Xiaomi, Oppo, and Huawei each captured 16%, and market leader Vivo led with 19%.

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6. Foreign Investors Step Up Dollar Hedging

Foreign investors are increasingly hedging their exposure to the dollar, reflecting growing concerns over the impact of Donald Trump’s policies on the world’s dominant currency.

According to Deutsche Bank analysis, hedged investments into US bonds and equities have surpassed unhedged holdings for the first time in four years, marking a sharp shift since Trump’s election last November. Strategist George Saravelos noted: “Foreigners may have returned to buying US assets, but they don’t want the dollar exposure that goes with it. They are removing dollar exposure at an unprecedented pace.”

The behavior helps explain an apparent paradox in US markets: Wall Street stocks have rebounded strongly following the tariff-induced sell-off in April, yet the dollar has not recovered. The greenback has fallen more than 10% this year against a basket of peers, pushing the euro above $1.18 to a four-year high.

Deutsche’s data show that about 80% of the roughly $7 billion that flowed into foreign-domiciled US equity ETFs over the past three months was hedged, compared with just 20% at the start of the year. Fund managers say clients want to maintain exposure to US equities amid the AI boom, but are less willing to hold dollar risk.

Arun Sai, senior multi-asset strategist at Pictet Asset Management, said his firm has boosted hedging of its US stock holdings, betting the dollar is in a “secular bear market.” He added, “It will continue to be the dollar that takes the brunt of eroding institutional credibility.”

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7. US Consumer Credit Scores Post Biggest Drop Since 2009

Consumer credit scores in the US saw their steepest decline since the aftermath of the 2009 global financial crisis.

According to a report released Tuesday by Fair Isaac Corp. (FICO), the average FICO score fell to 715 in April from 717 a year earlier, marking the second consecutive year-over-year drop. In 2009, the average score dropped three points to 687.

The scoring agency attributed the decline to higher utilization and delinquency rates, including the resumption of student loan delinquency reporting. Student loan delinquency reached a record high, impacting 3.1% of the entire scorable population. Meanwhile, the median FICO score edged higher to 745 from 744 a year ago.

Gen Z borrowers were hit hardest, recording the biggest annual decline of any age group since 2020, with their average score falling three points to 676, the report said.

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