Consumer Confidence Rises To Highest in Nine Months

[B]US Consumer confidence[/B], as compiled by the University of Michigan/Reuters, rose in June to a nine month high. The measure gained for the fourth time to 69.0 from 68.7 in the previous month. Economists polled by Bloomberg had expected a slightly higher increase to 69.5. Following a sharp rise in the index in April, the figure has moderated its pace of growth and today’s release, while positive, adds concern to what has been a tremendous upshoot in global markets since March. Of note, much of the same has occurred as recently as the latter half of 2008, in which the index fell to a low of 56.4 in June, quickly moved higher to 70.3 and collapsed to a new low at 55.3 in November. Going forward, rising delinquencies and unemployment treading closer to ten percent threaten to take confidence lower and consequently result in a slowdown in discretionary spending that would forestall an economic recovery. The economic outlook measure of the broad index provides evidence of this concern as the index dropped to 65.4 following three months of gains that led the measure to 69.4, the highest level since the start of recession in December 2007. Also raising pessimism, the inflation expectation for the year ahead increased to 3.1%, capping significant momentum from a low of 1.9% in February.

Markets in the US are currently trading lower along with European indices while Asian equities closed higher. Commodities are pulling off from recent highs while Crude remains above $70 per barrel. On the currency front, EUR/USD has begun to move lower and may be forming a head-and-shoulders top.