American consumer confidence fell sharply in September, with the Conference Board's index dropping 6.7 points to 81.9 — its lowest reading since 2014 and well below economists' expectations.
The report, released Tuesday, came in far below the consensus expectation of 89.2. Households told the survey they expect both business conditions and the labor market to weaken over the next six months, a signal that pessimism about the US economy is deepening.
Bond markets reacted with a mix of fear and stubbornness. The yield on the benchmark 10-year US Treasury note rose to 5.255 percent, after touching 5.2932 percent — its highest level since mid-June 2007. The 30-year yield climbed to 5.592 percent, its highest since June 2002. The rate-sensitive 2-year note, however, fell 3.51 basis points to 4.889 percent after Federal Reserve Bank of New York President John Williams said the central bank has time to weigh economic data before deciding when to hike interest rates again. Traders trimmed their expectations for an October rate hike to a roughly 50-50 chance, down from nearly 70 percent earlier in the day, according to LSEG data.
"It is, at the moment, the path of least resistance to test higher. We had consumer confidence data this morning, which was awful, yet yields have risen," said Padhraic Garvey, head of research at ING America, pointing to elevated inflation, interest-rate hikes and "astonishingly high" inflation-adjusted rates. "Typically, if you see a weak consumer confidence number that's bullish for bonds... But that's not what's happened today," he added.
Commentary from Fed officials was mixed. Chicago Fed President Austan Goolsbee warned that allowing inflation to stay above the central bank's target for five-and-a-half years is "playing with fire." St. Louis Fed President Alberto Musalem said US economic strength currently depends in part on optimism about the developing artificial intelligence industry — a potential downside risk if those expectations are not met.
Investors are now waiting for Wednesday's final reading of the August Personal Consumption Expenditures price index, the Fed's preferred inflation gauge, followed by September's nonfarm payrolls report on Friday.
Sources: The Economic Times / Reuters
The report, released Tuesday, came in far below the consensus expectation of 89.2. Households told the survey they expect both business conditions and the labor market to weaken over the next six months, a signal that pessimism about the US economy is deepening.
Bond markets reacted with a mix of fear and stubbornness. The yield on the benchmark 10-year US Treasury note rose to 5.255 percent, after touching 5.2932 percent — its highest level since mid-June 2007. The 30-year yield climbed to 5.592 percent, its highest since June 2002. The rate-sensitive 2-year note, however, fell 3.51 basis points to 4.889 percent after Federal Reserve Bank of New York President John Williams said the central bank has time to weigh economic data before deciding when to hike interest rates again. Traders trimmed their expectations for an October rate hike to a roughly 50-50 chance, down from nearly 70 percent earlier in the day, according to LSEG data.
"It is, at the moment, the path of least resistance to test higher. We had consumer confidence data this morning, which was awful, yet yields have risen," said Padhraic Garvey, head of research at ING America, pointing to elevated inflation, interest-rate hikes and "astonishingly high" inflation-adjusted rates. "Typically, if you see a weak consumer confidence number that's bullish for bonds... But that's not what's happened today," he added.
Commentary from Fed officials was mixed. Chicago Fed President Austan Goolsbee warned that allowing inflation to stay above the central bank's target for five-and-a-half years is "playing with fire." St. Louis Fed President Alberto Musalem said US economic strength currently depends in part on optimism about the developing artificial intelligence industry — a potential downside risk if those expectations are not met.
Investors are now waiting for Wednesday's final reading of the August Personal Consumption Expenditures price index, the Fed's preferred inflation gauge, followed by September's nonfarm payrolls report on Friday.
Sources: The Economic Times / Reuters
