Walmart's slowest quarter since the pandemic, and the cheapest credit since 2021

The shopper who did not show up

Walmart said on Thursday that sales at its American shops and websites open at least a year rose 2.6% last quarter [1]. That is its smallest quarterly gain since 2020 [1]. New rules on pharmacy pricing took a bite; without them the figure would have been 3.4% [1].

Either way it missed. Analysts polled by FactSet expected 3.8% [1]. Business Insider put the consensus at 3.7% [2]. The two are counting slightly different baskets of forecasts, and Walmart came in under both.

The smaller number carries more. Average spending per visit grew 1.1%, down from 3.1% a year earlier [2]. People still came through the door. They put less in the trolley.

The share price did the rest of the talking. Walmart fell about 9% to a low for 2026 [2][3]. It dragged the market with it. The Dow closed down nearly 700 points, more than 1%, the S&P 500 fell 0.9% and the Nasdaq 1% [3].

Why now: for four months running, prices have risen faster than pay [4]. The University of Michigan’s monthly survey of how people feel about the economy still reads worse than it did during covid [4]. Almost three-quarters of those asked in August expected prices to outrun their income over the next year [4]. “Consumers’ frustration over the erosion of their purchasing power continues to mount,” said Joanne Hsu, who runs the survey [4].

Not everything points down. New claims for unemployment benefit fell 6,000 to 206,000 in the week to 15 August, below the 210,000 economists expected [5]. Claims sit near the bottom of this year’s 189,000 to 230,000 range, and the jobless rate is 4.1% [5]. Layoffs are not the problem. The size of the basket is.

The same shopper shows up in what else sold. Ross Stores, which sells other retailers’ surplus cheap, raised its full-year profit forecast to $8.61-$8.77 a share from $7.50-$7.74 [6]. Target’s executives said “encouraged” or “encouraging” 20 times on their results call [7]. Hovnanian, a homebuilder, swung to a $1.8m quarterly loss from a $16.6m profit a year earlier, revenue down 12% to $705.7m, blaming high rates and soft confidence [8].

For anyone earning a wage: buying cheaper has stopped being a mood and started being a number.

The next move on rates might be up

The minutes of the US Federal Reserve’s July meeting, released Wednesday, show three officials voted to raise rates [9]. That is the biggest single group voting the same way against a rate decision since September 2016 [9]. “Several participants favored an increase of 25 basis points,” the minutes said - a basis point is a hundredth of a percentage point, so that is a quarter-point rise [9]. “Many participants” said tighter policy would likely be needed to get inflation back to the Fed’s 2% target [9].

Rate markets now put roughly a 35% chance on a rise at the 15-16 September meeting [10]. A Reuters markets columnist argued that, given how far diesel prices have moved, 35% may be too low [10]. Only 12 of the Fed’s 19 policymakers vote at any one meeting, so some of those pushing for a rise may not get a vote [9].

Bonds went the other way from shares. The 30-year Treasury yield rose 2.3 basis points to 5.217%, and the 10-year sat at 4.67% [11]. That was a day after the Treasury said it would at least double its buybacks of long-dated government bonds [11].

For anyone with a mortgage: the relief many expected this autumn is not on the table yet, and the risk has shifted toward it moving the other way.

The same afternoon, five lenders sliced up American debt

While the retail numbers landed, five separate deals turned pools of American borrowing into bonds. This is the machine that decides what a household loan costs, and almost none of it is reported.

Credit Acceptance, which lends to car buyers with poor credit, handed about $750.2m of loans to a company it owns, which issued $600m of notes against them [12]. Three classes: $319.88m paying 5.01%, $117.3m paying 5.29%, $162.82m paying 5.51% [12]. All-in cost about 5.5% a year [12]. It matches the largest such deal in the company’s history [12].

Jay Brinkley, its treasurer, said demand let the firm reach “our lowest credit spreads since late 2021” [12]. A credit spread is the extra interest a borrower pays on top of safe government debt. So the market is charging this lender its smallest risk premium in nearly five years - while its customers’ employer is warning that shoppers have pulled back. The total cost still rose a little against its May deal, because the government rate underneath it moved up [12].

Four more landed the same day. Upgrade, an online consumer lender, priced $219.35m in four classes, its fourth such deal of 2026 [13]. Prosper priced its first credit-card deal in six classes, backed by cards issued through Coastal Community Bank to borrowers whose credit sits a notch below the best [14]. Castlelake priced $261.3m against 327 short-term loans to house renovators across 23 states [15]. And U.S. Bank is preparing notes that pay out according to losses in a pool of company credit lines it keeps on its own books [16].

The Castlelake deal shows the shape most clearly, because it publishes every rung. The top class has 22.40% of the deal sitting beneath it to absorb losses first, and pays 5.682% [15]. The next has 15.50% beneath it and pays 6.184%. The third has 9.30% and pays 7.157%. The fourth has 5.00% and pays 6.500% - lower than the rung above it, a reminder that the advertised interest rate is not the whole return [15]. Castlelake keeps $13.75m of unrated notes at the very bottom, which it says aligns its interest with the investors above it [15].

The queue is now on sale to ordinary savers too. Guggenheim, which manages $367bn, launched a fund on Thursday that buys across “the full CLO capital structure” [17]. A CLO is a fund that buys company loans and sells slices of them. It follows a fund of loan-backed bonds that the firm listed on 15 June [17]. Carlyle’s listed fund holds the very bottom slice of such deals. It reported $4.3m of investment income for the quarter, and said the market had steadied after a rough start to the year [18].

For anyone with a car loan, a card balance or a mortgage: your monthly payment is the raw material for one of these.

Cheaper petrol in Johannesburg, dearer power in Tokyo

Japan’s headline inflation rate hit 1.9% in July, the highest this year [19]. Core inflation, which strips out fresh food but keeps energy, was 1.8% [19]. Energy prices rose for the first time since November 2025 despite government subsidies, because of the Iran war [19]. Wholesale inflation ran at 7.2%, with electricity the largest single contributor [19]. Fresh food jumped 7%, against 3.9% in June [19].

South Africa went the other way. Annual inflation slowed to 4.3% in July as fuel and food costs fell, the first relief in five months [20]. Rising oil prices could make it short-lived [20]. Egypt’s central bank held its deposit rate at 19% and its lending rate at 20% [21].

Currencies followed Washington. Sterling rose 0.4% to $1.3661, its highest since 16 February, while a gauge of the dollar against six major currencies slipped 0.2% to 98.61 [22]. Louis-Vincent Gave of Gavekal Research said a Treasury visibly trying to cap long-term borrowing costs is “bearish news” for the dollar, meaning he expects it to fall [22]. Gold fell 0.7% to $4,487.93 an ounce after jumping more than 4% the day before [23]. Bitcoin rose above $71,000 [24]. The dollar headed for a weekly loss, with Treasury Secretary Scott Bessent saying he may buy back more government bonds still [25].

Italy’s bank war, and a scramble for fund managers

Monte dei Paschi’s board approved bids for Banco BPM and the wealth manager Banca Generali, to fend off a 36 billion euro approach from Intesa Sanpaolo [26]. Monte dei Paschi is itself worth about 36 billion euros after buying Mediobanca last year [26]. BPM is worth 25 billion and Banca Generali 8 billion, so a combined group would be near 70 billion against Intesa’s 121 billion [26].

T. Rowe Price agreed to buy F/m Investments, which runs $19bn, including more than $10bn across 20 funds that trade like shares [27]. It is the second purchase of a fund manager this month, after Goldman Sachs agreed to pay up to $2.25bn for Neos [27]. “This is a scale game,” said Alex Morris, who founded F/m in 2019 [27]. That corner of the American fund industry now holds $15.7trn [27].

EverBank, bought by five private-equity firms in 2023, is up for sale and may list instead if no buyer appears [28]. Deere reported profit of $1.38bn, or $5.10 a share against the $4.69 expected, with construction machinery offsetting weak farm sales [29]. Shein pushed its Hong Kong listing to September at a reduced valuation [30].