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Friday data: Consumers grow grumpier, trade prices cool



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Main U.S. indexes modestly red; Dow off ~0.4%

Industrials weakest S&P 500 sector; Comm Svcs leads gainers

Euro STOXX 600 index down ~1%

Dollar up; gold up ~1%; bitcoin ~flat; crude dips

U.S. 10-Year Treasury yield dips to ~4.21%

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FRIDAY DATA: CONSUMERS GROW GRUMPIER, TRADE PRICES COOL

Data released on Friday furthered the inflation-is-cooling narrative, but consumers don't seem to be celebrating.

The mood of the American consumer, who shoulders about 70% of the U.S. economy, has unexpectedly deteriorated this month.

For its preliminary stab at May Consumer Sentiment USUMSP=ECI, the University of Michigan (UMich) delivered a topline reading of 65.6, a 5.1% slide from April's final print and the lowest it's been since November.

The number landed 6.4 points south of the 72 consensus

The "current conditions" component fell 7.1 points, while survey participants' near-term expectations dipped 1.2 points.

"Heading into the summer, the collective consumer mood is cautiously measured, lacking signs of either excessive optimism or pessimism," writes Jim Baird, CIO at Plante Moran Financial Advisors. "Consumers appear content to buy into a benign soft-landing forecast, but with a degree of skepticism, acknowledging that persistent questions about inflation and interest rates that is keeping a more pronounced sense of optimism in check."

But what consumers say and what they do are often two different things, as illustrated by the graphic below, which compares the monthly change in UMich against monthly change in consumer spending:



Regarding the dreaded "i" word, respondents' see inflation at 3.3% a year from now, unchanged from last month.

Five years out, while inflation expectations warmed up to 3.1% from 3.0%.

"Assessments of personal finances dipped, due to modestly rising concerns over high prices as well as weakening incomes," says Joanne Hsu, director of UMich's surveys of consumers.


That same "i" word also figures into the fact that the cost of goods and services imported and exported to and from the United States unexpectedly fell last month according to the Labor Department.

On a monthly basis, import and export prices decreased by 0.4% and 0.6%, respectively.

Year-over-year, the price of internationally traded goods and services are on the rise. Import prices are up 1.1% and export prices have gained 0.6% over the last 12 months.

While import/export prices are vulnerable to foreign demand, geopolitics and forex, they provided yet another bit of evidence supporting the notion that inflation is cooling down, just as Fed Chair Powell says it is.

"Both import and export prices declined from a month ago, solidifying the narrative that inflation is improving across the globe," writes Jeffrey Roach, chief economist at LPL Financial. "Inflation pressures are stuck with some sticky components, but other indicators suggest that inflation is easing and investors should expect the Fed to begin cutting rates later this year."



(Stephen Culp)

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FOR FRIDAY'S EARLIER LIVE MARKETS POSTS:


S&P 500, NASDAQ LOOK TO TAKE A BREATHER FROM THE RALLYING - CLICK HERE


BREADTH CHECK HAS NASDAQ, S&P 500 WHEEZING - CLICK HERE


M&A ACTIVITY: REBOUNDING AND STILL FRIENDLY - GS - CLICK HERE


NOT YET TIME TO BUY THE DIP - CLICK HERE


TECH STOCKS STILL PROPPING UP MARKETS - CLICK HERE


OATs SPILLOVER EFFECTS - CLICK HERE


STOXX 600 SLIPS, FRANCE'S CAC 40 PLUNGES FURTHER - CLICK HERE


EUROPEAN FUTURES INDICATING SMALL REBOUND, FRANCE STRUGGLING - CLICK HERE


BOJ'S DOVISH SURPRISE, AI AND THE POPE - CLICK HERE








UMich vs consumer spending https://reut.rs/3VHmVDk

UMich inflation expectations https://reut.rs/3Xnh47y

Import export prices and the dollar https://reut.rs/45mgI2Z

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