A preliminary survey released by the University of Michigan on Friday (15th) showed that consumer confidence rebounded from a record low last month, and consumer expectations for long-term inflation also fell, making the market aggressive towards the Federal Reserve (Fed). Expectations of a rate hike fell sharply, and U.S. stocks extended their intraday gains.
The preliminary reading of the University of Michigan’s consumer confidence index in the United States was 51.1 in July, higher than the expected 50, and the final value in June was 50. In terms of other indices, the initial value of the current situation index was reported at 57.1, the largest monthly increase since April 2021, and the expected value was 53.7, compared with the previous value of 53.8; the initial value of the expected index was reported at 47.3, a slight drop from the previous month.
In terms of inflation expectations, which are closely watched by the market, the final inflation expectation in July 1 was 5.2%, lower than the expected 5.3%, and the previous value was 5.3%. At the beginning of this year, the expectation reached 5.4%, a new high since 1981. The initial five-year inflation forecast was reported at 2.8%, a 12-month low, and the expected 3%, the previous value of 3.1%.
In the past year or so, the 5-year inflation forecast has been in a narrow range of 2.9%-3.1%, and the initial value in June once broke this range, reaching 3.3%, a new high since 2008, which has attracted market attention and is believed to be The loose performance of long-term inflation expectations, while the latest 5-year inflation forecast fell sharply to 2.8%, greatly alleviating concerns that inflation may get out of control.
Expectations for the Fed to raise interest rates by 4 yards (100 basis points) at the end of the month soared after the US consumer price index (CPI) hit a 40-year high in June this week.
However, after the latest release of the University of Michigan’s consumer confidence index and the cooling of expectations for a 4-yard rate hike by Fed hawks a few days ago, the market’s expectations for the Fed to raise interest rates by 4 yards in July plummeted, pushing US stocks higher during the session. .
In addition, the report also showed that 26% of consumers expect prices to stay the same or lower in the next 5 to 10 years, up from 11% a year ago, although consumer uncertainty about inflation continues to increase.
Respondents’ assessments of their personal finances also continued to deteriorate, reaching their lowest level since 2011, with more than half of respondents blaming inflation for lower living standards, the worst since the 2008 financial crisis.
Consumer confidence affects economic growth in the next few months. Pessimistic consumer sentiment will dampen spending levels, which in turn will affect the economic recovery. Optimistic consumer sentiment will help the future economy.
Market Reaction
U.S. stocks opened higher in early trading on the back of strong retail sales in June and the excellent performance of Citigroup’s earnings report. Then, the intraday gains gradually expanded amid the success of New York’s July Fed manufacturing index and July’s Michigan consumer confidence index.
Before the deadline,Dow Jones Industrial AverageUp 617.07 points or 2.01%, and temporarily reported 31,247.24 points;Nasdaq Composite IndexUp 164.79 points or 1.46%, and temporarily reported 11,415.97 points;S&P 500 IndexUp 66.64 points or 1.76%, and temporarily reported 3,857.02 points;Philadelphia SemiconductorThe index rose 39.27 or 1.49% to temporarily close at 2,666.18 points.
U.S. 10-year Treasury yieldContinued to fall, reported 2.919%,US dollar indexcontinued to fall to 107.835,goldThe decline converged to 0.07% and was temporarily quoted at $1,704.60 an ounce.