US consumer confidence collapsed in late 2007 as the US housing bubble burst and the US economy went into recession. By 2016, it had clawed its way back to neutral and then went from strength to strength until late 2018. Since then, measures of consumer confidence have oscillated within a fairly narrow band while maintaining historically high levels.
The latest Conference Board survey indicates US consumers remained very optimistic. November’s Consumer Confidence Index registered 125.5, slightly below the median consensus figure of 126.8 and a little below October’s final figure of 125.9. Consumers’ views of present conditions deteriorated from those held at the time of the October survey but they were “moderately more positive” with regards to future conditions.
NAB currency strategist Rodrigo Catril said, “US consumer confidence was weaker than expected, dropping for a fourth consecutive month but from a very high level.”
US financial markets sent Treasury yields lower across the curve. By the end of the day, the yield on 2-year Treasury bonds had lost 4bps to 1.58%, while 10-year and 30-year yields had each shed 2bps to 1.74% and 2.18% respectively.
In the futures market for federal funds, expectations of another cut in the short term remained low. According to end-of-day prices of federal funds futures, the implied probability of a 25bps rate cut at the FOMC’s December meeting remained at zero while the likelihood of a cut at January’s meeting inched up from 10% to 11%.