Consumer Confidence fell for the second consecutive month and to a four-month low, largely the result of the ongoing rise in gasoline prices. The drop in the S & P 500, which is also at a three-month low, has not helped either. The data was moderately lower than the expected view.
At the moment, respondents were slightly more positive about the labor market with just under 41% saying that jobs are “plentiful,” which is marginally higher than the pre pandemic average. Surprisingly a gauge of expected inflation over the next year was little changed from the prior month.
Are the unchanged inflationary expectations component the result of “Fed speak?” One Fed speaker after another in the past week has delivered empathic messages that they will keep policy tighter for longer if the economy remains stronger than expected.
Perhaps or maybe the incessant rise in crude is not yet reflected in future inflationary expectations believing energy prices will again back down.
Inflation is a two-part phenomenon; too much money chasing to few goods fearing higher prices tomorrow. There is a monetary and psychological component.
Treasuries were nominally higher in yield, continuing the relentless selloff that commenced about a week ago. The Treasury auctioned $48 billion of the two-year Treasury which was priced at 5.085%, the highest since 2006.
Equities were also moderately lower yesterday as September is measuring up to its reputation, increased volatility. According to CNBC all sectors are down for the month except for energy. The NASDAQ is down about 7.0% for the month, the S & P 500 off 5.2% and the Dow declined about 3.1%.
What will happen today?
Last night the foreign markets were mixed. London was down 0.23%, Paris up 0.04% and Frankfurt down 0.11%. China was up 0.16%, Japan up 0.18% and Hang Seng up 0.83%.
Futures are up about 0.3% as the markets may be oversold and yields have stabilized. Oil is up about 2%. The 10-year is up 7/32 to yield 4.57%.
