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 at historically high levels. The most recent figures have continued this pattern despite the presence of international geopolitical tensions and a jump in the price of oil.
The latest Conference Board survey indicates US consumers remained very optimistic even after a substantial fall in its Consumer Confidence Index. September’s index reading came in at 125.1, a sharp fall from August’s final figure of 134.2 and substantially below the consensus forecast figure of 133.5. Consumers’ views of present and future conditions deteriorated from those held at the time of the August survey.
Westpac noted the lower than expected figure but said the index “still remain at relatively high post-crisis levels.”
The consensus expectation prior to the report was for a reading of around 134 and US Treasury yields still fell hard across the yield curve while expectations of further rate cuts hardened. By the end of the day, 2-year yields had fallen by 5bps to 1.63%, the 10-year yield had lost 8bps to 1.65% and the 30-year yield had dropped by 7bps to 2.11%. In terms of likely US monetary policy, according to federal funds futures contracts the likelihood of a rate cut at the FOMC’s October meeting increased from 45% to 56%.