US: Focus on University of Michigan consumer sentiment – Nomura

Analysts at Nomura explains that the US consumers remained optimistic in the preliminary October University of Michigan consumer survey despite a small 1.1pp decline in the headline index to 99.0.

Key Quotes

“Solid job and income growth continue to keep consumer sentiment elevated. Consumer buying plans remain elevated and point to continued strong growth in personal consumption although worsening affordability has dampened home buying plans.”

“Inflation expectations at the one-year horizon increased 0.1pp to 2.8% while longer-term inflation expectations declined 0.2pp to 2.3%, their lowest level since December 2016.”

“The FOMC tends to look through monthly fluctuations in longer-term inflation expectations, but the sharp decline in October, after some stabilization during 2017-18, may be worth monitoring.”