On Friday, data from the University of Michigan showed the highest growth in consumer confidence since May 2013. Households gained support in the form of a third payment from the government for assistance during the pandemic. Higher-than-expected progress in vaccination also influenced sentiments.
The consumer sentiment index rose to 79.7 in March from 70.7 in February. The index of current conditions rose to 93, which is above the preliminary estimate of 91.5 and above the February one of 86.2. The inflation expectations for the year in advance fell to 3.1% from 3.3%, in line with preliminary data, but the five-year forecast rose to 2.8% from 2.7%.
At the same time, household spending declined and the core price index for personal consumption expenditure slowed down. Household spending decreased by 1.0% due to a 7.3% drop in income. According to the BEA, this is the largest drop in history, reflecting a decrease in government welfare benefits for people. Within the framework of state social allowance, “other” ones were reduced, in particular, payments to households that have an impact on the economy.
The core PCE price index in the United States, which excludes food and energy prices, decreased by 0.1% in comparison to the previous month. On an annualized basis, prices for basic commodities fell to 1.4%. This lowered expectations for the imminent curtailment of the Fed’s ultra-soft policy in some way, and against this background, the Treasury yield fell to 1.64%.
Oil prices declined amid news around the container ship Ever Given. According to the latest reports, the ship has been partially refloated which is the first step towards the unblocking of the Suez Canal. Brent oil decreased by 0.40% to $64.16 p/b. WTI decreased by 0.80% to $60.45 p/b.
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