Mixed Regional Fed Surveys Whilst Consumer Labour Market Optimism Dips

• The Richmond Fed manufacturing survey continued a series of mixed July results for regional Fed surveys, surprisingly rising from an upward revised -9 to 0 (cons -14) whilst noting marked improvement in two of its three components.
• It follows a beat for Empire and misses for both the Philly and Dallas surveys, with the broader takeaway ahead of next week’s ISM mfg likely still the relatively small decline in the flash PMI from 52.7 to 52.3 (albeit masking a larger slide in output).
• Going again the upside surprise for businesses was a larger than expected decline in Conf. Board consumer confidence from 98.4 to 95.7 (cons 97.0) for the third month running. It was led lower by the assessment of the present situation, “a sign growth has slowed at the start of Q3”. Expectations remained well below 80, “suggesting recession risks persist” with familiar concerns about inflation and especially gas and food prices.
• The gap between CB present situation and U.Mich current conditions indices narrowed very slightly from a record spread in June, implying some minor softening in a previously very strong labour market.

Conf. Board and U.Mich present/current measures of consumer confidence (yellow/white) and U.Mich-Conf.Board spread (green) vs UST 2s10s (pink)Source: Bloomberg