Michigan Consumer Sentiment Surpasses Expectations Amid Easing Inflation Concerns

Year-ahead inflation expectations decreased from 3.1% in December to 2.9% in January.  

Highlights

• Michigan Consumer Sentiment saw an improvement, rising from 69.7 in December to 79 in January.
• Current Economic Conditions experienced an increase, climbing from 73.3 to 81.9.
• Factory Orders recorded a 0.2% month-over-month increase in December.  

On February 2, 2024, the University of Michigan published the final results of the Michigan Consumer Sentiment report for January. The report revealed that Consumer Sentiment rose from 69.7 in December to 79 in January, surpassing the analyst consensus of 78.9.

Additionally, Current Economic Conditions improved from 73.3 in December to 81.9 in January, while the Index of Consumer Expectations increased from 67.4 to 77.1.

Commenting on the findings, the University of Michigan stated that consumers now feel confident that inflation will continue to ease, following doubts expressed in the fall.

On the same day, the Factory Orders report for December was released, showing a 0.2% month-over-month increase, aligning with analyst expectations.

Following the release of the Consumer Sentiment report, the U.S. Dollar Index reached new highs, aiming to stabilize above the 103.85 level. The strong Non Farm Payrolls report also supported the dollar's rise, and the better-than-expected Consumer Sentiment report is expected to further strengthen the American currency.

Meanwhile, Gold remained around the $2030 level as traders monitored the dollar's surge, with increasing Treasury yields further impacting the gold market.

In the equities market, the S&P 500 saw a recent rebound towards the 4920 level after an unsuccessful attempt to settle below 4900. However, the strong economic reports and the focus on rising Treasury yields exerted pressure on the S&P 500.