The University of Michigan’s Index of Consumer Sentiment is one of two monthly U.S. consumer sentiment indices, the other being the Conference Board’s Consumer Confidence Survey. It covers personal finances, business conditions and buying conditions.
The latest survey indicates U.S. consumers think current economic conditions were less favourable in January than at the time of the previous survey in December. However, the deterioration was small and related to current conditions, while expectations regarding the future remained unchanged. Measures of personal finances and buying intentions were described as exhibiting “persistent strength”.
Tax changes were mentioned by around one third of all respondents and the majority of these responses anticipated the impact “would be positive”. However, some uncertainty was expressed with respect to how much of a tax cut could be expected and how it would affect people on different rates of tax and in different states. Fuel prices and inflation expectations were largely unchanged and “consumers continued to remain very optimistic about the low national unemployment rate.”
U.S. bond yields finished the day higher while the reaction from currency markets was somewhat mixed. 2 year yields inched up 1bp to 2.05%, 10 year yields increased 3bps to 2.66% and 30 year yields added 2bp to 2.93%. The USD was stronger against the euro and sterling but weaker against the yen.