The first reading on US consumer sentiment from the University of Michigan
- Best reading since 2004
- Prior was 99.7
- Current conditions 122.8 vs 114.9 prior
- Expectations 88.6 vs 90.0 prior
- 1-year inflation expectations 2.9% vs 2.7% prior
- 5 year inflation steady at 2.5%
- "All of the gain in the Sentiment Index was among households with incomes in the bottom third"
- "Favorable mentions of the tax reform legislation were offset by unfavorable references to the tariffs on steel and aluminum-each was spontaneously cited by one-in-five consumers"
- "While income gains are still anticipated, the March survey found that the size of the expected income increase returned to the lows recorded in the past year"
- "Among the top-third income households, income expectations fell more and inflation expectations rose more; as these households account for more than half of all consumption expenditures, the data suggest that the relative lull in consumption in the 1st quarter may persist for another quarter"
- Full report
This is a very good report and is a reason to buy the US dollar. The Fed watches these numbers closely and it will give them more confidence to deliver a hawkish hike next week.
The big story is the jump in one-year inflation expectations to the best level in years.
