US Federal Reserve expands auto bond purchase, auto industry becomes bright spot of economic recovery

category:Finance
 US Federal Reserve expands auto bond purchase, auto industry becomes bright spot of economic recovery


Since the last update on July 10, the Fed has bought another $224 million in auto company related debt, the largest amount of any industry.

The auto industry is one of the few bright spots in American economic recovery

Apart from financial companies, cyclical consumer industry companies (including auto makers) are the most active issuers of new investment grade debt this year, according to the data.

Market analysts Vincent golle and Maeve Sheehy wrote last week that record low interest rates have helped the U.S. housing and auto markets recover and become a rare growth bright spot for the U.S. economy. The good performance of these industries has also helped to boost employment in the United States.

Although the U.S. auto industry has not returned to the level before the outbreak of the epidemic, sales growth of cars and light trucks accelerated for the third consecutive month in July, reaching 14.5 million vehicles per year, exceeding economists expectations.

Car sales are a key factor in the recovery of manufacturing, trump said at a White House press conference on August 4. The need for restocking will further stimulate the factory sector, and based on these data, we believe that the auto industry plays a very important role in stimulating economic recovery.

The chart below shows the recovery of the U.S. auto industry (blue line), construction industry (red line), residential related business (black line), leisure and hotel industry. We can see a good recovery of employment in the automobile industry.

Still, some auto industry leaders say they are cautiously optimistic about the U.S. economy for the rest of 2020, as the U.S. epidemic crisis continues to intensify.

Source of this article: Yang Bin, editor in charge of CFA_ NF4368