Michigan Consumer Sentiment Jumps To Its Highest Level Since July 2021

Key Insights

• Consumer Sentiment increased from 69.7 in December to 78.8 in January.
• Current Economic Conditions improved from 73.3 to 83.3.
• Index of Consumer Expectations grew from 67.4 to 75.9.

On January 19, the University of Michigan released preliminary Michigan Consumer Sentiment report for January.

The report indicated that Consumer Sentiment improved from 69.7 in December to 78.8 in January, compared to analyst consensus of 70. Currently, Consumer Sentiment is at its highest level since July 2021.

Current Economic Conditions increased from 73.3 in December to 83.3 in January, while Index of Consumer Expectations grew from 67.4 to 75.9.

The University of Michigan commented: “Over the last two months, sentiment has climbed a cumulative 29%, the largest two-month increase since 1991 as a recession ended […] Like December, there was a broad consensus of improved sentiment across age, income, education, and geography.”

Treasury yields continue to move higher after the release of the better-than-expected Consumer Sentiment data. Bond traders bet that Fed may be more hawkish than previously expected as the economy remains in a decent shape.

U.S. Dollar Index settled near the 103.50 level after the release of the report, supported by rising Treasury yields. The American currency has been moving higher since the start of the year as traders reduced their bets on a dovish Fed.

Gold pulled back towards the $2025 level as traders focused on stronger dollar and rising Treasury yields. There’s a chance that Fed will leave the federal funds rate unchanged in March, which is bearish for gold markets.

SP500 settled back below the 4800 level after the release of the report. Fed policy outlook remains the key catalyst for equity markets, although strong economic data may ultimately provide some support to stocks.

For a look at all of today’s economic events, check out our economic calendar.