Illustration: Aïda Amer/Axios

Ally Financial was the latest bank to declare a major profit windfall in its second quarter earnings report, as the U.S. banking industry's largest auto lender reported a profit increase of 67%.

Why it matters: Americans are borrowing record sums to buy new vehicles — and used ones — and they continue to pay relatively high interest rates. Banks are seeing big profits as a result.

The intrigue: U.S. Treasury yields have fallen to their lowest level in more than 2 years, pushing down interest rates on bonds and savings accounts. Yet, Fed data shows auto loan rates in Q2 remained well above their average over the past decade, and even higher than in the fourth quarter of 2018 when Treasury yields reached their highest since 2011.

  • The interest rates banks charge for loans are typically tied to the yield on Treasuries, as banks adjust their rates in conjunction with movement in the bond market to remain competitive for customers.
  • However, as rates in the U.S. and globally have fallen in 2019 that traditional correlation has not yet materialized.

What's happening: U.S. consumers are scaling back on new vehicle purchases and even buyers with top tier credit are opting for used instead of new, data shows, but the banks continue to squeeze big profits.

  • Ally's stock rose 6.5% to an all-time high of $33.49 a share Thursday as retail auto loans clocked $72.3 billion, up from $69.9 billion in the year-earlier period. Its average yield on retail auto loans increased to 6.58% from 6.08%.

Where it stands: Experian, which tracks millions of auto loans each month, said the average amount Americans are borrowing for a new vehicle rose to a record high of more than $32,000 last month.

  • Americans also are paying record high average monthly payments for both new and used vehicles.

"We have not seen a slowdown in loan demand. In fact, volume for new and used loans is up from previous years," Melinda Zabritski, senior director of automotive financial solutions for Experian, told CNBC in June.

The bottom line: Investors have worried that lower rates will hurt banks' profit margins and income. So far, that hasn't been the case.

Go deeper: Debt-ridden millennials are taking out loans to pay for weddings

Go deeper

Trump commutes Roger Stone's sentence

Roger Stone arriving at his sentencing hearing on Feb. 20. Photo: Drew Angerer/Getty Images

President Trump on Friday evening commuted the sentence of his longtime associate Roger Stone, according to two senior administration officials. Stone in February was sentenced to 40 months in prison for crimes including obstruction, witness tampering and making false statements to Congress.

Why it matters: The controversial move brings an abrupt end to the possibility of Stone spending time behind bars. He had been scheduled to report to prison on July 14.

Updated 10 hours ago - Health

Which states have set single-day coronavirus records this week

Data: COVID Tracking Project and state health department data compiled by Axios; Map: Danielle Alberti and Naema Ahmed/Axios

13 states this week surpassed records set just last week for their highest number of coronavirus infections in a single day, according to the COVID Tracking Project and state health department data. 16 states in total reported new highs.

The big picture: The United States' alarming rise in coronavirus cases isn't just due to increased testing — particularly where the number of cases has grown fastest over the last month, Axios' Andrew Witherspoon and Caitlin Owens report.

Updated 10 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 6:30 p.m. ET: 12,389,660 — Total deaths: 557,279 — Total recoveries — 6,830,596Map.
  2. U.S.: Total confirmed cases as of 6:30 p.m. ET: 3,169,611 — Total deaths: 133,885 — Total recoveries: 983,185 — Total tested: 38,856,341Map.
  3. Public health: The reality of the coronavirus bites.
  4. Trade: Trump says he's no longer considering phase-two trade deal with China because the pandemic damaged the two countries' relationship.
  5. 🎧 Podcast: Rural America has its own coronavirus problem.