Inflation Fears Hit Consumer Sentiment

Inflation expectations weighed further on consumer sentiment in November.

• UoM consumer sentiment was materially weaker than expected in the preliminary November report as it fell from 71.7 to 66.8 (consensus 72.5), a ten-year low.
• This was driven by "an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation".
• Inflation expectations were broadly as expected with the 1y up a tenth to 4.9% and the 5-10y unchanged at an elevated 2.9%.
• The 2 to 5 year segment of the Tsy curve initially rallied with the curve steepening as the data implied consumer weakness potentially denting the case for Fed hikes and the DXY dollar index moved to session lows, but both then retraced their steps.