What happened The stock of consumer-finance credit specialist Synchrony Financial (NYSE: SYF) declined by 10.7% in August, according to data from S&P Global Market Intelligence. So what If not for external headwinds, Synchrony shares may well have risen modestly in August. The company reported fairly strong second-quarter earnings in late July. Synchrony's net interest income jumped 11% year over year, driven by its acquisition of PayPal's consumer-credit program in July 2018, as well as by organic growth in its receivables portfolio. The higher interest income, coupled with a lower provision for loan losses and higher "other" income, pushed net income up 22% over the prior-year quarter, to $853 million. However, investors worried about two headwinds that could potentially compress Synchrony's performance in the months ahead. First, escalating tariffs announced by the Trump administration on $300 billion worth of goods imported from China are expected to impact prices of consumer items later this year. Up until now, much of the import duties in the ongoing trade war have impacted the manufacturing sector, but consumers may see prices rise on common household items and electronics this fall. This may curtail consumer spending, potentially leading to lower receivables balances and interest income for Synchrony, which benefits when cardholders tap into their available credit. Second, declining yields on government debt are affecting banks' profit margins, as banks make a smaller spread when investing customer deposits in lower-interest-yielding debt. This is a phenomenon that investors interested in investing in banking and consumer-credit stocks should be aware of. The yield on 10-year and 30-year U.S. Treasury instruments declined noticeably in August. Synchrony's shares are often affected by banking sector sentiment. Of course, Synchrony primarily generates income from interest charged to customers on credit card balances, but even in this case, falling government debt yields can be harmful. U.S. Treasury yields influence credit card interest rates, and declining interest rates may cut into Synchrony's profit margins. Image source: Getty Images. Now what Synchrony shares may currently be pressured by sentiment over tariffs and Treasury yields, but it's important to note that the company also expands its income through sheer growth in its receivables portfolio. Therefore, the aggressive acquisition of new credit card partners -- a strength of this company -- may help it offset a slowdown in consumer spending and withstand margin pressure in the coming quarters. 10 stocks we like better than Synchrony FinancialWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Synchrony Financial wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of June 1, 2019 Asit Sharma has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source