Summary:

• UoM consumer sentiment falls to 94.4 vs 97.0 exp
• Inflation expectations rise due to downwards revision to prior
• US500 on track for more records

The final economic data point of the week has come from the US, with a drop in the University of Michigan (UoM) consumer sentiment index. The reading for the month of January of 94.4 was a fair size miss on the 97.0 expected and marks the third consecutive reading to come in below the consensus forecast. 

Furthermore the previous reading was subject to a notable revision lower, not standing at 95.9 compared to 96.8 previously. The UoM number is probably the most widely viewed metric on consumer sentiment in the US and today’s decline follows the recent drop in the Conference Board equivalent. For much of this decade both these indicators have been in a steady uptrend as the recovery from the financial crisis took hold but the recent weakness could pose a possible warning sign. 

 

 Today’s disappointment in the Uni Mich reading is in keeping with recent weakness in the Conference Board equivalent. After a strong run higher since 2010 is consumer confidence turning lower? Source: XTB Macrobond

These releases don’t normally see a large immediate reaction in the markets and this has been the case once more today. They could however provide some early indications of softening in the US economy and it may be interesting now to keep a close eye on other US data.

The US500 remains close to its highest level of the week heading into the weekend. Source: xStation

It’s been another pleasing week for stock market bulls with the US500 breaking above the 2800 handle for the first time ever. The market is currently probing its highest levels of the week around  2810 – which is also an all-time high – and a Friday rip higher could lead price to post a record daily and weekly close too.