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Consumer Confidence Talking Points

  • Consumer confidence drops to the lowest level since September 2017
  • The S&P 500 and Dow Jones take a step back as the miss in consumer confidence was joined by underwhelming new home sales, casting doubt on the US economy
  • Treasury Yields are dropping this morning as investors seek out the safety of US debt, with the 10-Year yield at 1.987%

The US stock market is off to a rough start this morning on the back of several key economy data points. Consumer confidence and new home sales both disappointed this morning boosting concerns about the strength of the economy. This miss in consumer confidence from the Conference Board reinforces the downward shift in sentiment that UofM’s survey showed earlier this month. The Conference Board Index printed 121.5, down from last month’s reading of 131.3 – the resultant level is the lowest for the Index since September 2017. New home sales also disappointed with 626k, missing expectations of 684k.

SPX 5-Min Price Chart (Intraday) June 25th

SPX

The miss on Tuesday morning’s data is not being brushed off by market participants, with the SPX pushing down to 2,932 and Treasury yields continuing to fall as the 10-Year note hits 1.985%. It could be argued a risk-off sentiment has been reaffirmed by the movement in USDJPY, a common carry trade. Following the data releases, USDJPY fell to 106.83 before making a slight recovery.

USDJPY 3-Min Price Chart (Intraday) June 25th

USDJPY

The price reaction suggests investors are being prudent as the US economy hits some trouble and the Federal Reserve signals a shift in future policy leanings. This morning’s weak consumer confidence can be partially attributed to the recently reinvigorated trade tensions, but participants were also less optimistic about the future of the labor market. The report found consumers expecting fewer jobs in the economy increased from 13 percent in May to 14.8 percent in June.

--Written by Thomas Westwater, Intern Analyst for DailyFX.com

Contact and follow Thomas on Twitter @FxWestwater

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