University of Michigan preliminary sentiment for July 72.6 versus 65.5 estimate

University of Michigan consumer sentiment preliminary data for July 2023

Friday, 14/07/2023 | 14:00 GMT-0

Prior month 64.4
current conditions at 77.5 versus 70.4 estimate and 69.0 last month
expectations 69.4 versus 61.8 estimate and 61.5 last month
one year inflation it rises to 3.4% from 3.3% last month
5 year inflation expectations rises to 3.1% from 3.0% last month

The knee-jerk reaction is for yields to move a bit higher with the 2-year now up 11 basis points. The 10-year yield is up 5.4 basis points. Both are trading near highs for the day.

From Univ of Michigan's Director Joanne Hsu

Consumer sentiment rose for the second straight month, soaring 13% above June and reaching its most favorable reading since September 2021. All components of the index improved considerably, led by a 19% surge in long-term business conditions and 16% increase in short-run business conditions. Overall, sentiment climbed for all demographic groups except for lower-income consumers. The sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets. As seen in the chart, sentiment is now about halfway between the all-time historic low of 50 from June 2022 and the February 2020 pre-pandemic reading of 101.

Year-ahead inflation expectations were little changed, inching up from 3.3% in June to 3.4% in July and down from the high point of 5.4% from April 2022. Long-run inflation expectations were also virtually unchanged from June at 3.1%, again staying within the narrow 2.9-3.1% range for 23 of the last 24 months.

The final survey result will be released on Friday, July 28, 2023 at 10am ET. The preliminary data was obtained (apparently) before the better than expected CPI and PPI data. All things equal it will be curious to see if the final inflation data is influenced by the CPI headlines Conversely, stocks continue to surge which puts more money in pockets of consumer (wealth effect) could be a tail wind for inflation expectations.

Gas prices which can be a big influence on consumers views on inflation, have been steady nationwide over the last month