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16 Mar 2015
US survey-based inflation expectations raise doubt on June hike – ING
FXStreet (Barcelona) - Rob Carnell of ING reviews the US consumer confidence data release, and further comments that the rising survey-based inflation expectations might give FOMC doves an excuse to delay the widely anticipated mid-year rate hike by Fed.
Key Quotes
“The University of Michigan index of consumer confidence fell for a second consecutive month in March, mirroring other dismal activity related data in recent months.”
“But the direction of the survey overstates the bad news. The headline index of 91.2, although down from 95.4 in February, remains at a decent level, and consistent with 2.5% real consumer spending – though this would still be down on consumer spending growth in 4Q14.”
“But the key takeaway from this release is that despite the disappointing recent direction, consumer confidence remains strong, and assuming recent data weakness is at least largely weather related, recent declines should not undermine real consumer spending, which could come bounding back, buoyed by pent-up demand for items such as autos, and lifting consumer spending growth back to its recent ranges.”
“One other aspect of the survey was the inflation expectations for 5-10 years, which rose 0.1ppt to 2.8%."
“Survey-based inflation expectations like these have held up a lot better than market-based measures. And the fact that this is headed higher after its recent dip takes away one excuse the FOMC doves might have for leaving the FOMC statement unchanged on 18 March, and delaying what we believe will be a June rate hike.”
Key Quotes
“The University of Michigan index of consumer confidence fell for a second consecutive month in March, mirroring other dismal activity related data in recent months.”
“But the direction of the survey overstates the bad news. The headline index of 91.2, although down from 95.4 in February, remains at a decent level, and consistent with 2.5% real consumer spending – though this would still be down on consumer spending growth in 4Q14.”
“But the key takeaway from this release is that despite the disappointing recent direction, consumer confidence remains strong, and assuming recent data weakness is at least largely weather related, recent declines should not undermine real consumer spending, which could come bounding back, buoyed by pent-up demand for items such as autos, and lifting consumer spending growth back to its recent ranges.”
“One other aspect of the survey was the inflation expectations for 5-10 years, which rose 0.1ppt to 2.8%."
“Survey-based inflation expectations like these have held up a lot better than market-based measures. And the fact that this is headed higher after its recent dip takes away one excuse the FOMC doves might have for leaving the FOMC statement unchanged on 18 March, and delaying what we believe will be a June rate hike.”