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U.Mich Inflation Expectations Jump As Sentiment Wanes (But Only The Preliminary Release)

  • U.Mich 1Y inflation expectations increased further to 4.4% (cons 4.0) in the preliminary November release, building on the 4.2% in the finalized October print after it had been revised up from a preliminary 3.8% for a sharp rise from the 3.2% in September.
  • 5-10Y expectations also saw a surprise increase to 3.2% (cons 3.0) from 3.0%, breaking its 2.9-3.1 range seen in all but two months since Aug’21 and in turn pushing to its highest since 2011.
  • As a word of caution, recall the Jun’22 preliminary report when 5-10Y expectations surprisingly jumped to 3.3% before being revised down to 3.1% in the finalized print. Powell noted that in last week’s FOMC conference when asking in Q&A. “I think the UM thing got blown out of proportion a little bit, it was actually a preliminary estimate that got revised away, and I said it was preliminary in it, but that didn't get picked up”.
  • Consumer sentiment on the other hand was notably softer than expected at 60.4 (cons 63.7) after 63.8 with declines in both current conditions and expectations. It's the lowest since May.

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