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US Consumer Confidence Continues To Improve

James Boston
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US Consumer Confidence Continues To Improve

As we approach month end the Reuters Michigan confidence indicators hit the wires to sum up US economic activity over the previous four and a half weeks. This month’s headline Consumer Sentiment number has unsurprisingly come in higher at 86.9, for comparison the September number was recorded as 84.6 and consensus estimates pointed to a rise to 86.4 in today’s figure. Consumer Expectations have also been reported higher this month at 79.6, this represents an increase on last months 78.4 level and easily beats the forecast for a slight fall to 78.2. In measuring Current Conditions the Reuters Michigan survey has recorded a figure of 98.3 in comparison to September’s 98.9, this number was not anticipated to change today. Finally, the Inflation Expectations figure is reading at 2.9%, slightly higher than the 2.8% recorded in last month’s survey.

The US Dollar received a boost earlier in the week when the Federal Open Markets Committee (FOMC) officially announced the culmination of a year of tapering it’s secondary market bond purchases. There was absolutely no surprise element to the ultimate winding down of the quantitative easing program. The market’s reaction was more of a sigh of relief that the Federal Reserve is no longer directly pumping liquidity into the US economy, normally this would negatively impact on the markets but in this case the outcome was positive as it moves the Fed one step closer to hiking interest rates.

The line touted by the Fed during much of this year was that a cycle of rate hikes would begin no sooner than six months after the end of the tapering phase of the unwinding of the bond purchase program. The fact that the program completed on schedule means that rate hikes could now be possible in the spring of next year. The Fed has however strived to put some distance between tying itself to this time frame by redirecting it’s attention back towards more fundamental factors such as employment and inflation. The latter it know is challenging the upper bounds of it’s target level and this could herald rate hikes sooner than initially anticipated

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