Some investors might feel disappointed after latest University of Michigan data release. The headline consumer sentiment index fell to 76.2 in February from 79 in January, well below expected 80.8. This makes it the lowest figure since August 2020. The subindex measuring consumer expectations slid below 70 mark and amounted to 69.8 vs expected 75.7.
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Create account Try a demo Download mobile app Download mobile appUniversity of Michigan’s consumer sentiment has started to deteriorate again . Are we set for a double-dip pattern here? Source: University of Michigan
Deteriorating consumer sentiment might be seen as “bad news is good news” scenario. Treasury Secretary Yellen, in her first meeting with G7 finance ministers, stressed the importance of more fiscal support again. This leads to rising inflation expectations in the US, which is also reflected in today’s data. University of Michigan 1-year inflation outlook climbed to 3.3% against expected 3.0%, thus reaching highest levels since 2014. US yields have already started to pick up along with soaring inflation expectations. On Monday US 30-year yields surged above 2% for the first time since the pandemic began. Yields on the 10-year Treasury bonds have been rising consistently as well, climbing towards 1.20% in recent days. A steepening yield curve puts the Federal Reserve under pressure as jumping yields might be seen as a threat to the recovery. One cannot even rule out a potential taper tantrum (sharp pick up in yields) and some investors have already become worried about such scenario.
UoM’s 1-year inflation expectations climbed to highest levels since 2014. Source: Bloomberg (via: zerohedge).
