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U.S. Consumer Confidence Declines To Lowest Level In 10 Years.

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The University of Michigan surveys the monthly consumer sentiment. The U.S. index fell sharply by 13.5% from July to 70.2. The survey presents an indication of consumer’s opinions around the general economy.

This reading is a preliminary sentiment that is reported during the first half of the month. This was the lowest U.S. index since 2011. In the last 50 years, the only two significant declines were during the recession of 2007-2009 and the first lockdowns of April 2020.

The latest results show that Americans’ outlook on personal finances, inflation, and employment is uncertain. This data serves as an indication for the Federal Reserve. To start pulling back the stimulus package, which was intended as financial relief against the Covid-19 pandemic.

What was the impact on the markets?

Negative affect on the Treasury bond yields. The 10-Year Treasury yields dropping by 1.3%, and the 30-Year Treasury bond falling to 1.9%. Both were dropping by 8 and 9 basis points, respectively.  Yields were already down after the release of the weekly jobless claims by the Labor Department, adding another 375,000 jobless claims. 

The stock market indices also declined soon after the news was reported, Gold gained, and the U.S. dollar slipped as well. 

The economy is recovering. At the same time it seems to be slowing down amid the continued surge of infection rates caused by the Delta variant. This is evident in the reinstating of masks and other health restrictions by leading states and cities. The rapid surge of infections has resulted in hospitals running out of beds for infected patients. 

Therefore, these events influence consumers’ confidence, showing that the lack of assurance is related to health concerns.

However, economists believe the latest report is a short-term decline since the infection rates will stabilize, which could reverse consumer confidence. 

In addition, the consumer index is not the only sign of economic health, with recent positive job reports pointing to solid recovery even amidst the rising pandemic.

Analysts and investors will closely monitor the final report, which is due on 27 August. The expected forecast is 81.2.

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Justin N. Richards

Justin N. Richards is a Florida-based technical analyst, market researcher, educator, and trader. Justin began his career in Chicago in 2001 performing futures market analysis for floor traders at the Chicago Board of Trade and the Chicago Mercantile Exchange. He also worked for numerous brokerage firms during that time, all of which hold him in high regard, and he has been providing outstanding analysis services for traders worldwide ever since. Mr. Richards is an expert in the area of market patterns, price and time analysis as it applies to futures, Forex, and stocks. In addition to these talents, he provides educational services for investors looking to improve their analysis and trade skills. Justin has a B.A. in Business Administration from UCLA and an M.S. in Financial Markets and Trading from the Illinois Institute of Technology. Justin’s professional experience, education, and discipline, not only make him an exceptional analyst, they point him out as a reliable, hard working and intelligent business strategist who is dedicated to his craft.
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